Harry Dent Blog | The Death Of A Dream | Talkmarkets
Founder, Dent Research
Contributor's Links: Economy & Markets

Harry S. Dent Jr. studied economics in college in the 1970s, receiving his MBA from Harvard Business School, where he was a Baker Scholar and was elected to the Century Club for leadership excellence. Harry grew to find the study of economics vague and inconclusive and became so disillusioned by ... more

The Death Of A Dream

Date: Monday, July 16, 2018 9:25 PM EDT

It’s no secret that Millennials are not buying homes as early or to the degree that Boomers did. They saw the first major real estate crash since the Great Depression. So, rentals are up and home buying is down. But this is being called “the Dream on Hold.”

Our view is based purely on demographics, and it is more extreme than that: By 2024 the homeownership dream as a means to wealth will be DEAD!

This is not a theory. It has already happened in Japan. They’ve seen declines in home prices for 27 years now!

That just isn’t supposed to happen in a world where they aren’t making more real estate. I study Japan intensely, as they have gone through the whole Boomer bubble and burst cycle many years before us – and we haven’t seen the worst yet by this example.

Look at this chart. It fits our bubble model for real estate too well…

(Click on image to enlarge)

Their home prices peaked in 1991. This was the demographic peak for home buying at age 42.

Prices dropped 70% into 2013.

Our bubble model predictably took the same time to build as to bottom – 13 years. It was much larger and longer than the U.S. bubble in 2000 until 2006, which is why it burst deeper.

The bottom at 70% down was very close to the model that projects that real estate will crash back 85% to the bubble origin in 1978, or a forecast down 68%. Who says that was a “Black Swan” and unpredictable?

But that’s not the real story…

They’ve not bounced since, even though the young generation came along to buy again, albeit smaller than the Boomers in Japan.

It took me years to figure out why Japanese real estate didn’t at least bounce modestly when its Millennial generation went into a positive buying trend from 1998 into 2015 (on a 42-year lag).

The reason: “Dyers” are sellers.

And real estate lasts forever, making that more impactful.

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