Low Birth Rates

This weekend I was catching up on some reading and picked up an industry publication. It had an article by a broker in Illinois who made a case for a new root cause of the current housing market downturn. Since I hadn't heard this particular hypothesis I thought I'd share it with you!

Apparently in 1973 a whole lot of people didn't have babies! There were fewer babies born that year than any other year since World War II. That's 34 years ago. The average age of a first time home buyer today is 33. Voila! A year ago the housing market slowed as we hit a drought of first time home buyers.

The author makes the case that this pattern was also responsible for the last major downturn starting in 1989. Home sales declined for three consecutive years. As it happened at the time the average age of a first time home buyer was 25. And, as it happened, birth rates  declined beginning in 1964.

If that really is the major factor in today's slower market, the author says it will be four years before the cycle begins to move back up. That will be when we begin to see the "echo boomers" look to buy their first homes.

There's enough data here to intrigue me. And I'll be looking at demographics again over the next few weeks to see what other support I see for her theory.

In all honesty, though, I certainly hope she's wrong!

So, has anyone else heard this theory? Have any major economists bought into this? Obviously if it is true a lot of us will need to rethink a lot of our assumptions!