question: How did Baby Boomers destroy the housing market?
comment: They came of age during a golden era when it was easy to achieve the American dream. So they've got a good education, good jobs, and own all of the homes (own their own home, and maybe some rental properties). As a group they're living a lot longer, and so they've just got all of that wealth and housing locked up. The housing market is competitive and prices based around what you're willing to pay. If you're a broke millennial bidding against a house with 3 different boomers, you're going to be out of luck.
passages: Section::::Government policies.
  
  Section::::Government policies.:Housing tax policy.
  
  In July 1978, Section 121 allowed for a $100,000 one-time exclusion in capital gains for sellers 55 years or older at the time of sale. In 1981, the Section 121 exclusion was increased from $100,000 to $125,000. The Tax Reform Act of 1986 eliminated the tax deduction for interest paid on credit cards. As mortgage interest remained deductible, this encouraged the use of home equity through refinancing, second mortgages, and home equity lines of credit (HELOC) by consumers.
   BULLET::::- 1985–1991: Savings and Loan Crisis caused by rising interest rates and over development in the commercial real estate sector, and exacerbated by deregulation of savings and loan lending standards and a reduction in capital reserve requirements from 5% to 3%.
  
  BULLET::::- 1986: The Tax Reform Act of 1986 eliminated the tax deduction for interest paid on credit cards, encouraging the use of home equity through refinancing, second mortgages and home equity lines of credit (HELOC) by consumers.
  
  BULLET::::- 1986–1991: New homes constructed dropped from 1.8 to 1 million, the lowest rated since World War II.
   BULLET::::- January: The Median Home Price was $127,900, while the Average Home Price dropped to $147,400, down from $151,700 in January 1990. New Community Reinvestment Act regulations break down home-loan data by neighborhood, income, and race; encourage community groups to complain to banks and regulators by allowing community groups that marketed loans to collect a brokers fee; Fannie Mae allowed to receive affordable housing credit for buying subprime securities.
  
  BULLET::::- 1997: Mortgage denial rate of 29 percent for conventional home purchase loans.
   BULLET::::- 1974: Equal Credit Opportunity Act imposes heavy sanctions for financial institutions found guilty of discrimination on the basis of race, color, religion, national origin, sex, marital status, or age.
  
  BULLET::::- 1975: In January 1975, the Median Home Price was $37,200, while the Average Home Price was $39,500.
  
  BULLET::::- 1977: Community Reinvestment Act passed to encourage banks and savings and loan associations to offer credit to minority groups on lower incomes or owning small businesses "et seq."). Beforehand, the companies had been engaging in a practice known as redlining.
   Mortgage standards became lax because of a moral hazard, where each link in the mortgage chain collected profits while believing it was passing on risk. Mortgage denial rates for conventional home purchase loans, reported under the Home Mortgage Disclosure Act, have dropped noticeably, from 29 percent in 1998, to 14 percent in 2002 and 2003. Traditional gatekeepers such as mortgage securitizers and credit rating agencies lost their ability to maintain high standards because of competitive pressures.
   BULLET::::- 1994: Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA) repeals the interstate provisions of the Bank Holding Company Act of 1956 that regulated the actions of bank holding companies.
  
  BULLET::::- 1995:
   BULLET::::- 1991: US recession, new construction prices fall, but above inflationary growth allows them to return by 1997 in real terms.
  
  Section::::1992 - 2000.
  
  BULLET::::- 1992: Federal Housing Enterprises Financial Safety and Soundness Act of 1992 required Fannie Mae and Freddie Mac to devote a percentage of their lending to support affordable housing increasing their pooling and selling of such loans as securities; Office of Federal Housing Enterprise Oversight (OFHEO) created to oversee them.
   BULLET::::- 1981: The Section 121 exclusion, allowing for a one-time exclusion in capital gain for sellers 55 years or older at the time of sale, was increased from $100,000 to $125,000.
  
  BULLET::::- 1981: Each Federal Reserve bank establishes a Community Affairs Office to ensure compliance with Community Reinvestment Act.
  
  BULLET::::- 1985: In January 1985, the Median Home Price was $82,500, while the Average Home Price was $98,300.
   BULLET::::- July: The Taxpayer Relief Act of 1997 repealed the Section 121 exclusion and section 1034 rollover rules, and replaced them with a $500,000 married/$250,000 single exclusion of capital gains on the sale of a home, available once every two years. This encouraged people to buy more expensive first homes, as well as invest in second homes and investment properties.
   BULLET::::- 1989: One-month drop in sales of previously owned homes of 12.6 percent.; Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) enacted which established the Resolution Trust Corporation (RTC), closing hundreds of insolvent thrifts and moved regulatory authority to the Office of Thrift Supervision (OTS); required federal agencies to issue Community Reinvestment Act ratings publicly.
  
  BULLET::::- 1990: In January 1990, the Median Home Price was $125,000, while the Average Home Price was $151,700. The average cost of a new home in 1990 is $149,800 ($234,841 in 2007 dollars).
  
  BULLET::::- 1991–1997: Flat Housing prices.
   The Taxpayer Relief Act of 1997 repealed the Section 121 exclusion and section 1034 rollover rules, and replaced them with a $500,000 married/$250,000 single exclusion of capital gains on the sale of a home, available once every two years. This made housing the only investment which escaped capital gains. These tax laws encouraged people to buy expensive, fully mortgaged homes, as well as invest in second homes and investment properties, as opposed to investing in stocks, bonds, or other assets.
  
  Section::::Government policies.:Deregulation.
   BULLET::::- July, 1978: Section 121 allowed for a $100,000 one-time exclusion in capital gain for sellers 55 years or older at the time of sale.
   In many areas, particularly in those with most appreciation, non-standard loans went from almost unheard of to prevalent. For example, 80% of all mortgages initiated in San Diego region in 2004 were adjustable-rate, and 47% were interest only.
  
  In 1995, Fannie Mae and Freddie Mac began receiving affordable housing credit for buying Alt-A securities Academic opinion is divided on how much this contributed to GSE purchases of nonprime MBS and to growth of nonprime mortgage origination.
   Throughout the bubble period there was little if any mention of the fact that housing in many areas was (and still is) selling for well above replacement cost.
   The appreciation of home values far exceeded the income growth of many of these homebuyers, pushing them to leverage themselves beyond their means. They borrowed even more money in order to purchase homes whose cost was much greater than their ability to meet their mortgage obligations. Many of these homebuyers took out adjustable-rate mortgages during the period of low interest rates in order to purchase the home of their dreams. Initially, they were able to meet their mortgage obligations thanks to the low "teaser" rates being charged in the early years of the mortgage.
   Section::::Government policies.:Historically low interest rates.
  
  According to some, such as John B. Taylor and Thomas M. Hoenig, "excessive risk-taking and the housing boom" were brought on by the Federal Reserve holding "interest rates too low for too long".
   Millennials have also been shown to drive less, and seek housing choices in walkable neighborhoods close to transit. The numbers of automobile miles traveled increased each year between 1946 and 2004; today Americans drive less than 2004, and no more per person than in 1996. The decline in driving is most striking among young people aged 16 to 34, who drove 23% fewer miles on average in 2009 than their age group did in 2001.
   Others argue that "pretty much all the evidence on the housing crisis shows" that Fannie Mae, Freddie Mac, the (CRA) and their affordability goals were not a major reason for the bubble and crash.
  
  Law professor David Min argues that view (blaming GSE's and CRA) "is clearly contradicted by the facts", namely that
  
  BULLET::::- Parallel bubble-bust cycles occurred outside of the residential housing markets (for example, in commercial real estate and consumer credit).
  
  BULLET::::- Parallel financial crises struck other countries, which did not have analogous affordable housing policies
   BULLET::::- One of the most direct effects was on the construction of new houses. In 2005, 1,283,000 new single-family houses were sold, compared with an average of 609,000 per year during 1990–1995. The largest home builders, such as D. R. Horton, Pulte, and Lennar, saw their largest share prices and revenues in 2004–2005. D. R. Horton's stock went from $3 in early 1997 to all-time high of $42.82 on July 20, 2005. Pulte Corp's revenues grew from $2.33 billion in 1996 to $14.69 billion in 2005.
   The British housing market in the late 1980s and early 1990s experienced an almost unprecedented set of changes and pressures. A combination of circumstances produced the crisis, including changes in demography, income distribution, housing supply and tenure, but financial deregulation was particularly important. Housing affordability became a significant policy issue when the impact on the normal functioning of the owner occupied market became severe and when macro-economic feedback effects were perceived as serious. A number of specific policy changes resulted from this crisis, some of which may endure. Many of these revolve around the ability or otherwise of people to afford housing, whether as would-be buyers priced out of the boom, recent buyers losing their home through mortgage default or trapped by 'negative equity', or tenants affected by deregulation and much higher rent levels.
   The greatest effects of the Federal Housing Administration can be seen within minority populations and in cities. Nearly half of FHA's metropolitan area business is located in central cities, a percentage that is much higher than that of conventional loans. The FHA also lends to a higher percentage of African Americans and Hispanic Americans, as well as younger, credit-constrained borrowers, contributing to the increase in home ownership among these groups.
   BULLET::::- 1938 Fannie Mae is founded by the government under the New Deal. It is a stockholder-owned corporation that purchases and securitizes mortgages in order to ensure that funds are consistently available to the institutions that lend money to home buyers.
  
  Section::::1968–1991.
   BULLET::::- Mortgage equity withdrawals – primarily home equity loans and cash out refinancings – grew considerably since the early 1990s. According to US Federal Reserve estimates, in 2005 homeowners extracted $750 billion of equity from their homes (up from $106 billion in 1996), spending two thirds of it on personal consumption, home improvements, and credit card debt.
   The late 1960s and early 1970s were lean years for the savings and loan industry. A frantic building spree had led to many foreclosures in California and money was tight. Out-of-state money had poured into California because interest rates there were much higher than in the rest of the nation, but as other states began to match California's rates, the money was withdrawn.
   The result of these policies was that from 1970 to 2016, California's population growth (relative to the US average) slowed to a third of what it was during the previous three decades (now only 70 percent faster than the national pace), while appreciation of median home prices (relative to the US average) more than quadrupled to 80 percent greater than the national rate. 
  