BluefoxToday blog : Housing demand poised to return on account of echo boomers

Even though it looks like the slumping real estate market is showing some signs of improvement, like here in Las Vegas bank REOs in the lower half of the marketplace are selling briskly, there remain steep hurdles to overcome before it can be declared healthy again. Mortgage funding is hard to come by, many homeowners are upside down and unemployment is high, just to mention some of the obvious problems.

But if the focus is shifted over into the near future, then there is some reason to be optimistic about what's to come. Here is why. Harvard University's Joint Center for Housing Studies declares in its annual State of the Nation's Housing report that once the recession begins to fade, the real estate market will recover nicely due to favorable demographic developments.

According to the report so called echo boomers, the roughly 75 million citizens born between 1979 and 1995, will form the backbone for it. In the next 10 years they will spawn from 12.5 million to 14.8 million new households and that naturally means increased demand for housing. Everyone can easily put their arms around this theory.

What type of housing will they be looking for is another question? The present slump and the serious value erosion it brought along with it in many areas, most notably Las Vegas and much of Arizona, California, Florida, must cause many would be home buyers to pause. If it happened now, it can recur. They are feeling the pain as their parents are faced with the effects of negative equity.

What about the availability of mortgage money? It'll predictably take lenders a few years to work their balance sheets back to sustainable health. And then what? Underwriting standards are going to be stricter from here on out and only time will tell what they will be in two or three years. That factor, too, will definitely have an effect on how much demand the echo boomers will actually generate.