April 17, 2007

Boomer and immigrants, and housing

USC demographer Dowell Myers is going to be in town again this week to discuss some of the conclusions in his book, Immigrants and Boomers: Forging a New Social Contract for the Future of America.

Here is Myers take on the housing bubble, from an email he sent me this morning:

"I think the greatest impact is formation of "the Califronia Island". Our high prices now really cut us off from migration from other states (and domestic migration HAS gone negative even though we have substantial job growth, and immigration is also lower than in 1995-2000). All has changed since 2000. Back then our prices were only 156% higher in Califorinia than Texas. By 2005 the barrier increased to 351%. Effectively, an already high barrier has now doubled and may be prohibitive for anyone other than New Yorkers or New Englanders.

Meanwhile the generation gap has also opened wider. As a ratio to the incomes of 30-34 year-olds, California prices doubled from a multiple of 4.2 to 8.7. So how are younger people really supposed to bail out the baby boomers when they want to cash out their homes? I call this false accumulation of wealth 'piggybank mirage.'"

But all is not lost. One of the themes of Myers' book is that the solution to this problem is already here: the millions of young immigrants who are now coming of age. If we educate and train them and equip them to be productive members of the workforce, they will continue to buy houses in big numbers and at least, perhaps, keep the market from imploding.

Posted by dweintraub on April 17, 2007 10:42 AM