In today article Mish posted the questions to understand the supply and demand at real estate market. And I added one more, marked with italics:

Understanding Demand – 3 Questions

  1. Who wants a house that does not have one?
  2. Who wants a house that can afford one?
  3. Who does not have a house and is willing to pay substantially more than rental prices for one?

Understanding Supply – 3 Questions

  1. How many have a house they can not afford?
  2. How many have a house they soon will not be able to afford?
  3. How many plan to downsize even if they can afford their current house?

For the aging boomers the question #3 is the right one to ask. Traditionally, the people who saved a lot of equity in their home prior to retirement, usually downsize and exctract the big chunk of money from their home. Subsequently, the proceeding of this downsize is either invested into conservative retirement funds or just gambled out on stock market

I have all the reasons to believe that the number of people desiring to downsize will far outnumber those who plan to move upscale. Connect the dots