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AUDIE CORNISH, HOST:

This is WEEKEND EDITION from NPR News. I'm Audie Cornish.

At this time about five years ago, the white-hot housing market was just starting to cool. Before long, it would slip into a deep freeze. We haven't seen a thaw yet, which is bad news for today's home sellers. But even worse, the slump could permanently reduce the net wealth of an entire generation.

Here to explain is NPR senior business editor Marilyn Geewax. Marilyn, welcome.

MARILYN GEEWAX, BYLINE: Hi, Audie.

CORNISH: First, give us an update. What is the status of the housing market at this point?

GEEWAX: This seems almost hard to believe, but residential real estate is still heading down. And, you know, prices are down about a third since 2006, and they are continuing to drop in most cities. The National Association of Realtors - they put out a report recently that said this summer, prices fell almost 5 percent compared with last year.

This is shaping up to be, for the single-family housing market, the worst year on record. And, you know, we've got records going back a half a century.

CORNISH: And now we're heading into winter, which really isn't the - kind of - high selling season. But is there any end in sight?

GEEWAX: Not really. All of the latest reports are showing that home foreclosures are shooting up again. You know, we saw a brief lull last year because the banks had to straighten out all of that paperwork related to foreclosures. But they've whittled down that pile of paperwork and now, they're throwing delinquent borrowers out of their homes again.

CORNISH: So how is this slump essentially reshaping people's lives?

GEEWAX: Well, it's kind of changing the narrative for a lot of people's lives. Many people grew up hoping to own their own home. They wanted to see their kids grow up throwing a football around in their own backyard. But instead, they may be pushing buttons in an apartment building because they can never own.

But for a lot of younger people, this is more than just a phase in life. It's going to continue all the way through their lives into their old age.

CORNISH: Because they've lost the opportunity to build wealth, or...

GEEWAX: Yes, exactly. If you think about how retirement is going to unfold for baby boomers compared with gen-Xers - the generation that came behind them - you can see how this is a problem. If you were a boomer who bought a typical house in 1991, you paid the typical price of $100,000. So if you sell the house today, the typical price is $170,000. Even when you take into account inflation, you are still going to come out ahead if you're a baby boomer. But it's very different for the gen-Xer.

CORNISH: And that is bad news for me, frankly.

(SOUNDBITE OF LAUGHTER)

CORNISH: So give me the lowdown on what it means for my generation.

GEEWAX: Well, you know, say you were 30 years old in 2006. If you bought the typical house then, it was the peak of the bubble; you paid about $250,000. Now, you're in your mid-30s and your house has dropped in value by about a third. You're not building wealth; you're actually backsliding.

CORNISH: How widespread is this?

GEEWAX: It's a problem that's really showing up in the statistics. The Pew Research Center released a study this past week, and it showed that older Americans have actually become a wealthier demographic group, compared with older people back in the 1980s. But at the same time, younger households - those with the head of household 35 or younger - they've actually gotten poorer.

And the big difference has been this home equity thing. If you were a person who bought your house 20,30 years ago, you're still doing OK. And if you're a younger person who bought your house in the last five, eight years, you're underwater and you're losing ground.

CORNISH: What does all of this mean for the economy in the long term?

GEEWAX: It's definitely not good. You want people to be heading towards retirement with as much wealth as possible. But this younger generation, they're off to such a tough start. They have had a bad job market, depressed wages; they've had these falling home prices. So, it's bad.

But it's fair to point out that we can't predict the future accurately. We live in an age of technological wonders. And there may be some innovations coming that perk up the economy. But if you're looking to your house to be the source of your wealth in retirement, that is very unlikely for the younger generation.

CORNISH: NPR senior business editor Marilyn Geewax. Marilyn, thanks so much.

GEEWAX: Oh, you're welcome

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