Here is a great story on baby boomers and the housing bubble.
As it turns out, the generation that turned society upside down in the 60’s and 70’s is about to have bum trip of its own.
From CNNMoney by Les Christie entitled: Boomers 30% Underwater
“What a turnaround for the American Dream!
According to a report released Wednesday, the real estate market bust and stock market declines have carved a huge chunk out of the assets of baby boomers.
So much home equity has been lost that 30% of boomers, aged 45 to 54, are underwater in their homes, according to “The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble. ” The report, released by D.C.-based think tank the Center for Economic and Policy Research, also found that 18% of boomers aged 55 to 64 would owe money at close if they sold their homes.
The CEPR also found that people who were renting homes in 2004 will have more wealth in 2009 than those who were owners. That’s true for all five wealth groups the study analyzed, from the poorest to the wealthiest.
To come up with their estimates Baker and co-author David Rosnick analyzed the assets of boomer-headed families and projected their wealth through September 2009. They used data from the November 2008 Case-Shiller 20 City Price Index as well as the 2004 Survey of Consumer Finance – a survey of the balance sheet, pension, income, and other demographic characteristics of U.S. families put out by the Federal Reserve. The authors then factored in stock and housing market changes since then.
Boomers between 45 and 54 have lost 45% of their median net worth, leaving them with just $80,000 in net worth, including home equity, according to the report.
Older boomers have fared marginally better. Those between 55 and 64 have lost 38% of their net worth, leaving them with $140,000. But this group is rapidly nearing retirement age and they have few working years left to make up the losses.
“The collapse of the housing bubble, which led to the current recession, has already destroyed almost $6 trillion dollars in housing wealth for homeowners,” said report co-author Dean Baker. “This reality is compounded by the recent collapse of the stock market. Many baby boomers will only have Social Security and Medicare to rely on in their retirement.”
Ouch.
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