Real Estate n LA: November 2013

Some economists have recently sounded the alarm that a 'lost generation of homebuyers,' namely those born after 1980, are locked in permanent financial stagnation that will prevent the majority from ever forming households. This generation, coined 'millenials' by overzealous media marketeers, contends with crushing student loans, limited employment opportunities, rising rates, low inventory with rising prices and an ever-shrinking median wage income when compared to prior generations.

Not surprisingly, all the hype and hysteria are overblown. Though 31.6% of those 35 and under still live with their parents, homeownership in this demographic continues to grow, slowly. Joseph Snider, VP and senior credit officer at Moody's Investor's Service, acknowledges the troubling conditions, but rightly reminds us that every generation faces its own set of challenges. While the recent economic downturn seemed never-ending, and our climb out of the ditch is sluggish at best, there are sustained signs of real progress. These conditions are cyclical, not permanent.

Says Snider, "Just as shrinking home sizes eventually proved a cyclical rather than secular event that reversed when the downturn ended, the malaise affecting the world's strongest economy will not last forever. We believe millenials will follow every generation that preceded them, buying homes once their economic situation improves."