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Boomers Downed by Cheap Houses for Sale

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By : John Cutts    99 or more times read
About 48 percent of baby boomers have lost a great deal of home equity, based on the findings by two researchers of the Washington, D.C.-based think tank Center for Economic and Policy Research. The baby boomers, the biggest age group in the nationís history, have lost much of their assets due to stock market losses and home price declines caused by the glut of cheap houses for sale.

According to the think tankís report about 30 percent of boomers in the 45 to 54 age range would owe money if they sell their houses during these times of thousands of cheap houses for sale. Meantime, about 18 percent of boomers in the 55 to 64 age range are underwater and will need to pay a large amount if they sell during the downturn.

Peter Schiff, head of investment firm Euro Pacific Capital, thinks house prices will continue to decline because of peopleís realization of the economic reality. He cited himself who has rented for many years because he found out he will save more renting than buying his own house. He said housing prices will reflect economic conditions. The soaring number of cheap houses for sale is a reflection of difficult times.

Dean Baker and David Rosnick, authors of the CEPR report, wrote their report by analyzing the 2004 balance sheets, demographics, pensions and income data of families released by the Federal Reserve and the Case-Shiller Price Index for November 2008. They integrated changes in the stock and housing markets such as the surplus of cheap houses for sale and made net worth projections through September 2009.

According to Baker and Rosnick, boomers in the 45 to 54 age range have lost about 45 percent of their wealth, with only $80,000 remaining. Although the situation of boomers in the 55 to 64 age range is better, their net worth has also declined by 38 percent, with only $140,000 remaining. These two groups lost much home equity because of the glut of cheap houses for sale across the country.

Baker also discovered that families renting in 2004 will have higher net worth in 2009 than families who owned homes because of the adverse effects of thousands of cheap houses for sale. The losses of boomer homeowners have also been compounded by the breakdown of the securities markets.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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