Caveat venditor?

James Angelini, associate professor of taxation at Boston's Suffolk University, recently penned a letter to the Wall Street Journal encapsulating the demographic influences on the nation's housing demand.

It's not a pretty picture — though Coffee Talk would suggest that future demand for housing along the Gulf Coast might not be as subdued as elsewhere in the U.S.
Angelini references the well-worn baby boomers factoid that there are 78 million of them, who are just now entering their retirement years. The first boomers officially turned 65 last Jan. 1. But the professor also notes that the average boomer has only saved about $140,000 for retirement, not counting what might remain of home equity. That, Angelini suggests, means boomers will be looking to downsize their residences to afford retirement.

And Angelini notes that boomers' parents, about 40 million of them, are also more likely to be sellers than buyers of homes. The buyers: just 41 million Gen Xers, the generation right behind the boomers. So the buyers group is only a third of the 118 million potential sellers.

“Even if they sell some to their own generation, the law of supply and demand will dictate massive price decreases, and no easy money policy will be able to compensate,” he writes. Further, Angelini notes that housing price deflation can be expected to continue until the millennium generation ages into home buying.

But there is an offsetting “short-term remedy,” according to Angelini: “ ... massive immigration, as happened in the early 1900s, which created the baby-boom economic miracle that we have been enjoying for decades and which is now almost over.”

For Florida and the Gulf Coast, immigration has long been the source fueling the state's growth, though more traditionally from northern states than Central and South America. Now, the state and region may need immigrants from all of the above to balance housing supply with demand and maintain price levels.

Fortunately, Florida and the Gulf Coast continue to have much to offer future baby boomer retirees, and Gov. Scott and the Legislature have taken steps to position the state for job growth that could attract immigrant workers. (That is, if we're not overzealous with immigration reform measures.)

Still, politicians and homeowners may wish to heed Angelini's final words: “In the long term, people create wealth, not economic policies. Seller beware.”