When boomers bust

There's a theory abounding out there in the blogosphere that since the baby boom generation of 78 million drove the housing boom and the quest for larger homes in various suburbs, that their future retirement (which is starting now) and potential downsizing will mean a marked decline in future demand.

But it hasn't been until now that a detailed, state-by-state analysis has been done. As covered in USA Today, USC professor Dowell Meyers says that the midwest and the northeast will be the first casualties (2006-2010) with California avoiding the change in demand until 2021:

In the next two decades, as millions of aging baby boomers put their homes on the market, they'll put downward pressure on prices, and their exodus will reshape neighborhoods and cities coast to coast, according to research released Wednesday.

In some states, the trend has already begun, making it harder for areas to recover from the real estate recession, which isn't expected to bottom out until the second half of this year at the earliest.

There are already more sellers than buyers in six states: Connecticut, New York (excluding Manhattan), North Dakota, Pennsylvania, West Virginia and Hawaii. The trend first hits areas with cold weather and traffic congestion, which tend to drive retirees away...

Last hit should be warm-weather states, such as Florida, Arizona and Nevada, where retirees usually sell late in life. That's good news for homeowners in those states, where prices and sales are reeling from the collapse of the real estate bubble...

"It's most pertinent to declining parts of the country," said William Frey, a demographer at the Brookings Institution who agrees with Myers' conclusions. "The glut of homes on the market from baby boomers will depress the housing market and have an impact on some suburban neighborhoods that will come to look like older city neighborhoods that have undergone blight and disrepair."

The math is simple: 79 million boomers have driven up housing demand. That trend will reverse itself when boomers are age 65 to 75; there will be three sellers for each buyer, Myers says.

REAL ESTATE CROSSOVERS When selling will exceed buying for each state 2006- 2010 2011- 2015 2016- 2020 2021-2025 2026- 2030 2031- later CT MA IA CA AL AK HI LA IL KS AZ NY NE ME KY AR ND NJ MT MD CO PA OH SD MI DE WV RI VT MS FL WY NM GA OK ID WI IN MN MO NH NV NC OR SC TN TX UT VA WA Source: Dowell Myers, Sung Ho Ryu, Univ. of Southern Calif.