What migth get lost in ‘Puter’s excellent post here is the following: The elephant in the room that liberals steadfastly ignore is that the housing market under the best of conditions is destined to deflate or at best hold level over the next twenty or so years. Why? Because demographics are destiny.
The liberals will continue to bemoan those who say “let the market take it’s course”. But, in the end the market will take it’s course. I’ll equate the situation to something from my past: years ago I went on a Boy Scout high adventure camp where a small group of us did whitewater canoeing in Maine for a week. Two jokers in our group who didn’t listen to the guide ended up sideways in the middle of a class III (bordering on class IV) set of rapids. Their canoe broadsided a rock in the middle of the river, tipped upstream and began filling with water. The jokers got out safely and the gear was recovered, but do you know what happens to an aluminum canoe pivoted on a rock with a river of water rushing into it? It’s starts to bend…and rivets pop…and 4 grown men with Z-lines and pulleys couldn’t budge it. Eventually a crowbar/pin-iron was added to the mix and the remnants of the canoe were trucked off. Much like the river, the market forces which include demographics, cannot be swayed much by government intervention.
In closing, I’ll add one point that ‘Puter didn’t add. Not only are the demographics of the housing market in play here, but you need to consider the investment profiles of the demographics. The Boomers are starting to remove money from the investment markets as they retire. Note ‘Puter’s ratio of 3:2 between the generations – there will likely be more money coming out than going in. It’s not a pretty picture.