A theoretical sketch:
Young people are supposed to borrow money to buy houses, start business, and get educations that allow them to “buy out” the previous generation. Then they work, and as they age they save, often moving from home to home as their families grow. They eventually become the net creditors who are then bought out by the succeeding generation. They often downsize their homes. This is the generational lifecycle. It is the mechanism of social reproduction.
The cog in the generational lifecycle is the Georgist land cycle. Because the supply of land (especially urban locations) is fixed, its value is inevitably whipsawed by speculation. The more people buy land at the peak of the land cycle and lose out, the more land ends up in the hands of the wealthy (banks), who can afford to wait to sell the land when prices rise again. Everyone else must suffer.
If after several of these cycles, people lack the purchasing power to buy out the previous generation, they cease to reproduce—more so thanks to the contraception revolution—and existing landowners hoard land for longer, exacerbating the disruption of the generational lifecycle.
I believe this happened in Japan after its land bubble burst in 1990. I’m sure some moss-covered media outlet is overdue for an article on “herbivore” men and “parasite single” women.
Here’s evidence for the disruption in the United States. Behold the household formation rate.
(Source: Table 13, 13(a), spikes due mainly to Census revisions)
Note that the conventional (blue) and revised (red) estimates were at a combined record low last year.
Now here are total households by age.
(Source: Table 12, 12(a))
…And declining homeownership rates.
(Source: Table 12, 12(a))
Undoubtedly, the relatively large boomer cohort is influencing what’s shown here, but eyeballing the charts shows that the 35-44 and <35 brackets are the ones that have been hampered the most. Also, the measure of new households isn’t a perfect measure of what we’re looking for. For instance, I have no idea how many people live in roommate-type arrangements or live alone. However, if you want more direct evidence of the disruption of the generational lifecycle, you can see here the percentage of 25- to 34-year-olds who are children of householders. For women, the percentage has pretty much doubled since 2004. You can also see that for men the typical low was about 10 percent before 1980.
(Source: Table AD-1b)
Mass unemployment and low wages ensure that young people won’t be able to buy out the older generation. Somewhere along the chain of homeowners, people will be unable to (or believe they will be unable to) sell their homes to the next household in the sequence. This will create pessimism for homeownership, freeze growth, and further reduce the number of future households.
Without reform it could take many years for the negative feedback from the land cycle to stop disrupting social reproduction.