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    The real estate market’s demographic problem in “the most depressing” chart ever

    The real estate market’s demographic problem in “the most depressing” chart ever

    How low is low? Has real estate bottomed out?

    Via @TheBubbleBubble, some advice about not thinking the real estate bubble is done imploding:

    Via Business Insider,  ‘The Most Depressing Slide I’ve Ever Created’ demonstrates that we are not generating enough of a next generation to buy our houses:

    Citi’s Global Head of Credit Strategy, Matt King, has a knack for  putting together useful illustrations.

    Here, he examines one of the implications of one of the most powerful forces in  all of economics: demographics.

    King explained his charts to us like this:

    It’s what I like to call “the most depressing slide I’ve ever created.” In almost every country you look at, the peak in real estate prices has coincided – give or take literally a couple of years – with the peak in the inverse dependency ratio (the proportion of population of working age relative to old and young).

    In the past, we all levered up, bought a big house, enjoyed capital gains tax-free, lived in the thing, and then, when the kids grew up and left home, we sold it to someone in our children’s generation. Unfortunately, that doesn’t work so well when there start to be more pensioners than workers.

    The slide:

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    Comments


    […] RELATED: From  William A. Jacobson at Legal Insurrection, The real estate market’s demographic problem in “the most depressing” chart ever. […]

    Spengler nailed this in 2009: http://www.firstthings.com/article/2009/05/demographics–depression-1243457089

    Demographics is the root cause here. Governments try to conceal its effects by printing money, but that only transfers wealth to the banker class. I don’t blame the bankers — if you found your dog dead and covered with flies, would you blame the flies?


     
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    AlecRawls | March 27, 2013 at 1:37 pm

    Could be real, but there are really only two data points here: world real estate prices dropping in the last few years and Japanese real estate prices dropping 20 years ago. The global recession could explain the former without adverting to demographics. Still, the demographic explanation is plausible.


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