Two Generations – One Problem.

The drop in the US housing market is being partly compounded by a tri-effect created by the baby boomers and the echo boomers, (echo boomers are those born between 1989 and 1993).

1. The millions of graduating echo boomers who enter the workforce annually are, like many Americans, finding it extremely difficult to find employment. Instead of going solo, getting apartments or committing to first homes, they are returning back to their parents and taking refuge.

2. At the same time their new boomer landlords are not retiring because of recently depleted retirement funds, the drop in equity in their home and battered stocks. Coupled with a recession where many eliminated jobs will not return there was talk of 10-11% unemployment before we reach the light at the end of this economic tunnel.

3. Currently and for the foreseeable future we are not building or retrofitting the typical number of affordable entry level rentals. When the economy strengthens (lets say 2011) we may face a huge shortage, triggering a spike in rental prices.

Could these two generations could end up stifling US recovery? Is this the ultimate catch 22 or just a red herring?

Source of the idea: Huffington Post.

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