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Multigenerational Homes Coming to a Neighborhood Near You

First a little history.  One of the reasons WW2 fueled such a boom in America was that while the men were at war (and earning GI pay), women were at home (earning labor pay).  Since everything was being rationed, there weren't a whole lot of Michael Kors handbags being sold, and so the money these duel income families had saved was able to be used after the war to fuel investment - primarily in housing - and America was soon off to the races again.  The men worked, the women mostly stayed home, but there was full employment and America was able to grow its way out of its war debts.  When the US debt to GDP ratio once again got out of control in the seventies and inflation began to bite, the solution households themselves implemented turned out to be the thing that made the most difference - namely that women went to work.  The cure for the seventies was not just Reaganomics, it was sharing the bite of inflation between two workers in most households.

As we experience seventies-style inflation, once again households themselves are making the most important adjustment of all.  As we see savings, retirement accounts, pensions, social security, and Medicare lose purchasing power and unemployment biting the oldest, youngest, and minorities the worst (while the rich get richer), we are in the midst of a change in the number of people opting to live under one roof to make ends meet.  For this reason, I don't expect real estate to recover meaningfully.  Just as commercial real estate has suffered from the rise of online shopping, residential real estate will suffer from the coming multi-generational housing paradigm.

That this paradigm is the norm in most of the rest of the world will not be lost on many of us.  Which makes me ponder the question, when the US exports its inflation to the rest of the world, as it did in QE2, what are people in China, India, Africa and Russia going to do (other than despise America, of course)?


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