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Death’s Perspective on a Booming Housing Market

Photo by Roselyn Tirado on Unsplash

In the last week, the U.S. Census Bureau has released their updated view of the demography of the United States as of the year 2020.  One of the key takeaways from the report looked at the most common ages in the United States currently.

As Baby Boomers have aged and begun to shrink as a generation, the large millennial generation is marching to and firmly into its thirties.  And despite much ‘sturm und drang’ about differences in generations, these erstwhile Millennials are behaving in manners consistent with prior generations – namely they are marrying, beginning to procreate, and buy their own houses.

Understandably, Wall Street looks at the size of this demographic cohort, the number of US Households, and recent trends in building rates for new real estate, and generates an optimistic story about a coming growth cycle for housing construction in the United States. Furnishing a new home is naturally accompanied by a massive amount of follow-on consumption as the family outfits rooms, updates/changes the home’s style to fit personal taste, etc.  Below is a favorite chart of mine that looks at major consumption categories by age.

Figure 1-1: Consumer Life Cycle 
46 
Furniture 
41 
Trade-Up Homes 
31 
Starter Homes 
51 College Tuition 
Autos 
60 
Hospitals 
Vacation & 
65 
70 
Retirement Homes 
Cruise Ships 
77 
Prescription Drugs 
84 
20 
26 
Apartments 
25 30 35 
40 
45 
50 
55 
Age 
60 
65 
70 
Nursing Homes 
80 85 
75 
90 
Data Source: U.S. Census Bureau, Dent Research 
O Harry S. Dent, Jr.

And yet, consistent with Charlie Munger’s sage wisdom to invert something to consider it fully, it seems helpful as we potentially enter a bull market for household formation, home construction, and furnishings, to consider the ‘de-consumption habits’ that occur at the end of life.

To do so, I would like to recount the story of one set of my grandparents.  While I grew up 14+ hours away from them, I was fortunate to live near them during the end of their lives. Their story was not unique.  As they aged, they sold the house they had built and furnished, to downsize into a smaller, single family home.  When living far from family was no longer tenable, they moved into an independent living apartment closer to family.  Following the passing of my grandfather, my grandmother was able to live independently for a period, until she moved into a nursing facility, where she ultimately passed.

Among many parts of aging that struck me was how the size of life seemed to shrink with each stage’s move.  Downsizing from a house to an apartment entailed shedding many of life’s possessions. Ultimately in a nursing facility – a common final station before meeting life’s end, life was subsumed to its smallest existence.  A bed, a chair, a TV, art/pictures on the walls, and a glass display case to display a few precious possessions. 

I have often considered that glass case to be a tremendous litmus test for consumption.  When purchasing something, it is eye opening to realize that likely 99%+ of the things we buy, will be transitory in nature.  They will never rise to the level of inclusion in our ultimate glass case. As such, the few things that acquire great sentimental value and objects de arte that are beautiful / provoke wonder are likely the only things that accompany us into the final innings of life. 

As we live then in the intervening period, it seems then we should heavily lean on finding things that give us great enjoyment in their use or in their aesthetic pleasure.  But we should dissuade ourselves from the notion of the need for perfection (we just need the perfect dining room table) or completion of consumption (if we could just finish furnishing the house, then x).  In a world full of entropy, completion this side of eternity is a mirage. 

Disclaimer: Not investment advice or recommendation

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