It seems everyone these days is looking for a bottom in the housing market, or a sign of normalcy, as we’ve known it.  The truth may be that housing will never return to what normal has been in the past.   The reason isn’t the just the economy or tighter lending standards, it’s may be simple demographics.

Please consider why trends in housing may have changed, Permanently.

1. Baby Boomers:  The baby boomers (born 1946-1964) are the largest and spendiest generation in American history, and their 40 year shopping spree is coming to an end.  
2. McMansion Glut:  Boomers are buying fewer single family homes and they are getting rid of the suburban McMansions they purchased when their children lived at home.  Evidence already shows that boomers favor 2 and 3 bedroom condo’s over 4 or 5 bedroom houses.   The Boomer trend to a smaller house, combined with fears of gas prices and long commutes, mean that the big house in the burbs is not the ideal dream house or location that is has been in the past.
3. Baby Boomers, Again:  Boomers are reorganizing their finances.  After the stock market crash, and with retirement approaching, fewer boomers will be purchasing vacation and second homes. 
4. Generation X:  The generation born between 1965-1976 will be unlikely to bid up home prices.  First, there are only 44 million X’ers compared to 76 million boomers.   Secondly, they are not as wealthy as their parents, and they are deeper in debt, due in part to college loans. 
5. Migration Back to City Life:  Due to our aging population, smaller family size and energy costs, people are returning to urban area’s that have not been overbuilt and offer quality of lifestyle. 
6. Permanent Changes:  The days of buying a huge home on a big lot, and paying for it with a 2 hour commute, may be ending.  This trend could mean that owners in McMansion communities, with little to no public transportation, will havetrouble finding buyers.   Some people predict that the large, single family homes, located miles from urban centers, will be subdivided into inexpensive housing for low and moderate income families, as the car lovers who moved to the burbs return back to the convenience of city life.

One thing that is certain is that change happens.  As environmental, economic, political and cultural forces change the way we live, our view of residential home investing will change, too.

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