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jbw · Guest

Talking about government pension plans is way off topic, but the housing issue and pension plan cost issue both have the same origin. People are living longer. This is causing the population of the united states to grow despite low birth and immigration rates. Pension plans are solvent when the median lifetime was 67yrs. Similarly, thirty years ago the baby boomers would be looking to starting to liquidate assets such as their homes.

Instead, they are not leaving the housing market and infact many are entering semi-retirement where they live in their retirement homes on the weekends and trek back to their Boston suburb homes on Sunday night.

This thirst for housing is what is called the cohort vs traditional demographic approach to housing. One site on this is
http://www-rcf.usc.edu/~dowell/pubs/demohaus/demohaus.htm

Traditionalists predicted that peoples behaviors is a function of age, so they estimate how many people would be of a certain age, and then calculate their behavior. Based on this model, baby boomers would feeble and looking to unload their homes and housing prices would have declined 47% between 1989 and 2009.

The cohort people think that age groups act as a group that shows similar behavior as the age, so the house hungry behavior of the baby boomers would continue, which would increase demand.

It may look like the cohort group was correct, but I suspect that if account for the fact that people are living longer, your will find that when boomer are 70 they will be acting like their parents did when they were 60 and they will be dumping a lot of homes onto the market.

My contention is that in real times for the Ma and national markets as a whole, homes are worth more now than they ever will be again.

jbw · Guest

I meant real terms

Guest · Posted: Tue May 22, 2007 10:59 pm GMT Post subject:

john p · Joined: 10 Mar 2006 Posts: 1820

You two guys, I'm honestly humbled by your insight. I am very happy to have gotten your feedback.

You know talking inside and outside of a topic in and out gives you this feel about the subject before you get a clear picture.

I wonder if some towns will be in a deeper financial crisis than others so from a property tax perspective, keeping an eye on the financial health might pay dividends. You know I'm not sure what a town's responsibility is versus the State in servicing the pensions, it is a State thing, but towns control the salaries so I wonder how the whole thing gets sorted out. I wonder if some mean and lean towns are going to get pissed at the fat and lazy ones. I wonder if the COLAs in Springfield, MA will be the same as for Boston? Governments are shifting costs from Federal to State and from State to local so financial health of a town will be important. When you hear that the Boston City Council is debating whether or not you should spank your kid's ass it makes you wonder if they are geared up for the tuning necessary to yield the financial health and quality education that the City needs. I'm not sure if towns have any financial requirements to meet or any capital structure benchmarks to adhere to so I'm not sure if a town could actually go bankrupt. I know some have better bond ratings than others. Taxes could certainly go up so again, the financial health and mental stability of the governing officials is important and will impact house values.

Housing bubbles, pension bubbles, industry segment bubbles, Big Dig was a bubble for our system, the baby boom is a bubble of population, tuition costs are bubbling... If you're a Republican, you might be afraid that the inmates are running the asylum now. I guess it is Budget time for State Government so all our fears that Massachusetts will be Taxachusetts is going to be determined in the next few weeks... I think this will impact housing and may be the impetus for some companies to pull up stakes..