Tuesday, August 29, 2006

Baby Housing Boom

Anyone could have predicted the recent housing boom that started in 2004 or 2005 with records being set every quarter in sales, price, and construction. It was just about 29 years earlier that we saw a similar surge in 1976-1980 when the great Baby Boom generation had kids and needed homes. From 1942-1946 there was almost no housing construction or buying because the world was at war. By 1946 everyone began rebuilding and returning to a normal life. From 1947-50 the world saw the biggest Baby Boom since the end of the Crusades with the possible exception of 1919-21. The end of the First World War just happened to be about 28 or 29 years, one home generation, before the great Baby Boom doubling the effect and making it even more significant.

So it should have come as no surprise to anyone that I was born near the end of the great Baby Boom (1950), had a child and bought my first home between 1976 and 1980 (I actually bought 2) amid rising prices and interest rates. Sadly, the Federal Reserve under the Carter Administration didn't have a clue what was happening or what to do about it. [See Stagflation below.]

Just as predictably, my son had his first child and bought his first home in 2005, amid rising prices and interest rates, right on schedule. With greedy Republicans in charge this time, prices soared by 40% in one year in many areas. I'm not sure that was much better. But at least they knew it was coming.

I have no doubt that in 2034 there will be yet another housing boom with rising prices and interest rates as my grand-daughter has a child and buys her first home. Yet most people will be surprised when it happens.