I was struck by these lines in an article in the Telegraph in London, UK, titled 'Psychological barriers stop old people from downsizing, says housing minister'.
Older people have to overcome a “psychological barrier” which stops them downsizing to a smaller home, the housing and planning minister has said.
Brandon Lewis said he wanted property companies to build more attractive bungalows which would encourage pensioners to move out of their empty family homes.
. . .
Research in 2011 estimated that 25 million bedrooms in England were empty, largely because elderly couples do not move out of family homes to smaller properties.
At the same time, young families are increasingly being squeezed into small homes and overcrowded flats as a result of the country’s high property prices.
There's more at the link.
I'm not so sure Mr. Lewis has it right. I think of far greater importance than so-called 'psychological barriers' is the reality that very few people - younger or older - are earning enough money to be able to afford to buy a larger house. The recession has left many working in jobs that are relatively poorly paid. Family incomes are often considerably lower than they were even a decade ago. On the other hand, property prices have increased steadily, fueled by so-called 'quantitative easing' (a.k.a. 'printing money') and ZIRP that has made piles of money available to corporate investors in the housing market. Bloomberg went so far as to report in 2013, 'Families Blocked by Investors From Buying U.S. Homes'. The flood of buy-to-let investments has driven house prices higher than many families can afford.
What this means is that Mr. and Mrs. Older American (or Briton) are sitting in a house that's valued, on paper at least, at a very high figure - too high for younger Americans or Britons to afford on their reduced incomes. Even if older families wanted to downsize, if they can't sell their larger homes, they can't free up the money they have invested in them in order to buy something smaller. That's not a psychological issue - it's a classic catch-22 situation.
I think the housing market is headed for a steep decline, probably equalling (if not surpassing) in intensity that which we saw in 2007/08. I think present prices are unsustainable, and not supported by any underlying economic reality. A property is ultimately worth only what someone's willing to pay for it . . . and relatively few people are prepared to pay the inflated prices currently being demanded. I suppose we'll have to wait and see what happens.