Numbers Don't Lie
I love to talk to my Uncle George. He has all these strong opinions. Unfortunately about half of them are totally wrong and the other half are only partially correct. He doesn’t understand demographics. Numbers and trends create pressures that end up changing the facts which become our history. Can we look forward and predict them? Actually we can.
Here is the history – the 83,000,000 Baby Boomers moved
Western home prices up 340% in ten years from 1970 to 1980 when they bought their
first homes. Interest rates on loans
averaged 16.5% in 1981 when they peaked.
Then came the 47,000,000 GenXers.
Not a big deal population wise, but plenty to keep the engine running on the
economy. And, now the Millennials at a whopping 73,000,000. What do you think is going to happen to our
economy when this next mega generation starts buying?
On the chart below you can see the decade jump in the 1970s and the trend line from 1995 to the present in RED. We are currently below the trend line - translation - homes are a good value NOW.
Uncle George thought the automatic transmission was a
communist plot to build a generation of weak left-legged Americans. He also says it will be fifteen years until
the economy recovers. Boy, is he going
to be surprised at what happens next.
Here come the Millennials!