March 16, 2004

Population Assumptions II

Poliblogger notes that Greenspan is bullish on mortgage debt. As I've noted before, secular trends in rising real estate prices can be upset by shrinking populations. If a new black death were to sweep the world, dropping worldwide population by a third, housing prices would crater for a long, long time as excess housing stock was absorbed.

But plague and war are not the only way that population can drop as the EU is finding out with it's sub-replacement fertility rates. Greenspan's a very bright fellow but I think that he might want to make the implicit assumption in his analysis explicit. The growth of mortgage debt is only a good thing if the US does not fall into negative population growth.

Posted by TMLutas at March 16, 2004 11:52 AM