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Very interesting thought.

Something to consider: capital gains tax avoidance - provided there is actually a 'gain' when the homeowner eventually sells - is not usually the first motivation. Especially on the front end of the decision, since tax laws change over time. If anything, the bias may be for boomers nearing retirement to cash out, rather than buy in.

Other considerations buyers may have in weighing whether to trade up:
- Job prospects and stability
- After-tax income prospects in general
- Affordability and predictability of carrying costs on larger homes, including real estate taxes and energy costs.

Shaky jobs prospects, higher income taxes, the prospect of increased real estate taxes (almost inevitable) and higher costs to heat/cool are all much more immediate. Plus the demographic trend towards more manageable homes as boomers retire (and the need to diversify out of real estate for retirement, into more liquid investments, and not into larger homes) all could be drags on the prospects for building larger new homes.

Lastly, as with autos, when we do see a recovery we may see a trend toward more expensive, but smaller and more efficient homes (with fewer but higher-tech materials).

Interesting line of reasoning, though.
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