What is the effect of baby boom generations on the housing market? This question is answered by Marc Francke and Matthijs Korevaar in a publication in The Journal of Finance, entitled “Baby Booms and Asset Booms: Demographic Change and the Housing Market.”
This research paper is based on a very simple fact: people need housing throughout their lives. But buying and selling a home typically happens at specific ages. Most people become homeowners around the age of 30, and most exit homeownership later in life when moving to senior housing, or after passing away.
Using data that go back centuries, the authors show the impact of this age pattern on the housing market: a baby boom generation tends to push house prices up some 25–30 years later, and drives them down again when that same generation leaves the market.