Dr. Housing Bubble on shrinking income, increasing debt, and housing prospects

The sustainability of the housing market is going to come from the potential pool of younger home buyers. The housing market since World War II has followed a very common and steady path up until the 2000s. Each year it was expected that home values would increase but this also came hand and hand with rising household incomes. There is little mention of how big of a hit household income has taken over the last decade. The pattern is broken so to expect that we are now going to be back on a similar path that was very familiar to the baby boomer generation is simply not the case. When we look at the actual income declines taken by the younger groups we realize that something is very different now. Combine this stagnant household income with large levels of student debt and you have headwinds that are likely to keep a lid on the entry level of the market.

Dr. Housing Bubble
The indebted young and shrinking middle class – 6 charts examining fluctuating income changes and the impact on the future housing market