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As for as a ‘massive sell off’ of baby boomer owned real estate, I can already see the first signs of that happening. It’s especially true in smaller towns and areas younger people are moving away from, and I believe prices will start to drop like a rock in the next decade.
As for as a ‘massive sell off’ of baby boomer owned real estate, I can already see the first signs of that happening. It’s especially true in smaller towns and areas younger people are moving away from, and I believe prices will start to drop like a rock in the next decade.
I wouldn't mind at all if prices did drop like a rock. I actually don't care either way, so I don't have any preference.
I don't think it is going to happen any time soon though.
IMO, boomers aren't going to sell, and haven't so far, nearly as much as people think. Plus, the millennials are an even larger generation than the boomers, are getting up there in age now, and will be buying more of the market. Even in cities that had the largest percent of baby boomers leaving the market, they still had large gains in real estate prices. I actually wouldn't be surprised if real estate stays strong, albeit much slower, for many more years. It would be unprecedented, but the last recession really changed the game from here on out. Everything is moving, from a supply stand point, and not just in housing, but all business in general, at a snails pace. This is going to let the market drag on for much longer than everyone thinks.
Now smaller towns, rural etc... I don't even consider those places in the game, meaning no matter what happens in real estate or the economy, those areas are doomed anyway. The recession took care of that and they aren't coming back any time soon.
I find this article really dumb. It's basically blaming baby boomers for the housing crisis in unaffordable areas, I'm assuming areas like the SF Bay Area.
These articles or theories/ways of thinking, are always looking for someone to blame for the high cost of living in the booming metropolises like the SF Bay Area, Houston, etc.
I guess if it makes them feel better to target baby boomers for not selling off their homes, so the younger generation can buy them for a cheaper price than the current market allows - more power to them. But, the entire premises is really stupid. It relies on a huge number of baby boomer retirees all of a sudden putting their homes up for sale, so there is a glut of available homes on the market, so the prices of available homes goes down because of supply and demand.
I think one of the reasons boomers are not selling is because they can't find homes with first floor master bedrooms. Houses like that are hard to find. So the article talks about "when" boomers move to multi-family dwellings... not realizing that an elevator building (condo or rental apartment) is the only way many people can find a home without steps. Also, they seem to expect homeowners to become renters in their older years. That's not financially savvy for someone who has a paid off house.
I wouldn't mind at all if prices did drop like a rock. I actually don't care either way, so I don't have any preference.
I don't think it is going to happen any time soon though.
IMO, boomers aren't going to sell, and haven't so far, nearly as much as people think. Plus, the millennials are an even larger generation than the boomers, are getting up there in age now, and will be buying more of the market. Even in cities that had the largest percent of baby boomers leaving the market, they still had large gains in real estate prices. I actually wouldn't be surprised if real estate stays strong, albeit much slower, for many more years. It would be unprecedented, but the last recession really changed the game from here on out. Everything is moving, from a supply stand point, and not just in housing, but all business in general, at a snails pace. This is going to let the market drag on for much longer than everyone thinks.
Now smaller towns, rural etc... I don't even consider those places in the game, meaning no matter what happens in real estate or the economy, those areas are doomed anyway. The recession took care of that and they aren't coming back any time soon.
I don’t know, I live in a smaller town and I don’t really think it’s doomed because I still see new houses being built. What I have noticed though, is that ‘millennials’ seem to want new houses, and aren’t very interested in the older 50’s/60’s houses that their parents and grandparents live in.
I wouldn't mind at all if prices did drop like a rock. I actually don't care either way, so I don't have any preference.
I don't think it is going to happen any time soon though.
IMO, boomers aren't going to sell, and haven't so far, nearly as much as people think. Plus, the millennials are an even larger generation than the boomers, are getting up there in age now, and will be buying more of the market. Even in cities that had the largest percent of baby boomers leaving the market, they still had large gains in real estate prices. I actually wouldn't be surprised if real estate stays strong, albeit much slower, for many more years. It would be unprecedented, but the last recession really changed the game from here on out. Everything is moving, from a supply stand point, and not just in housing, but all business in general, at a snails pace. This is going to let the market drag on for much longer than everyone thinks.
Now smaller towns, rural etc... I don't even consider those places in the game, meaning no matter what happens in real estate or the economy, those areas are doomed anyway. The recession took care of that and they aren't coming back any time soon.
Funny, around here, smaller towns and rural within an hour or two of major cities are growing like crazy, too much in some cases. And the real estate market is not as hot as it was a few years ago, but it's still in multiple-offer city and prices keep going up.
I find this article really dumb. It's basically blaming baby boomers for the housing crisis in unaffordable areas, I'm assuming areas like the SF Bay Area.
These articles or theories/ways of thinking, are always looking for someone to blame for the high cost of living in the booming metropolises like the SF Bay Area, Houston, etc.
I guess if it makes them feel better to target baby boomers for not selling off their homes, so the younger generation can buy them for a cheaper price than the current market allows - more power to them. But, the entire premises is really stupid. It relies on a huge number of baby boomer retirees all of a sudden putting their homes up for sale, so there is a glut of available homes on the market, so the prices of available homes goes down because of supply and demand.
Just really stupid and ridiculous.
The article DID state that seniors are not to blame, and that they're feeling the pinch as much as the other generations.
Alright, now we're talking my kind've lingo! I've financed many a homebuilder in my career!
Things to consider outside of the article is the change in regulatory oversight from the banks. How does that connect to this topic? Well, go into any new neighborhood sales center anywhere in the country and ask them how many "spec units" they have, otherwise known as quick move-ins. I'd be willing to bet not many if any at all. That has been the case since the housing crash 10 years ago now. What does this do to housing prices? Well, it keeps the supply/demand curve better in-check and therefore puts upward pressure on value. Gone are the days where a buyer had a choice between buying an existing or buying a brand new and moving into either in say 30 days. Can move into the existing that quickly, but likely not the new construction. Banks never want to have a portfolio of unsold residential homes on their books again like they did in the recession. In structuring a loan for a home builder, there are certain restrictions that weren't prevalent back in the last boom, namely how many unsold units you could have under construction at any given time. Today, that number typically remains very very low, like less than 5 at any given time kind of low. In the last housing boom, that kind of restriction wasn't very prevalent. It was more along the lines of "get it all built as fast as possible regardless".
So, why aren't the Baby Boomers taking advantage of this? Well a couple of reasons. (1) chances are maybe they refinanced 10 years ago during that boom and they can't clear enough today to put towards another place that makes financial sense to move. (2) since new construction costs so much now, thanks to the run-up in land, labor and materials costs, existing are faced with the likelihood of paying the same for less of a house than they already have. (3) they're comfortable in "the tree" they're in, meaning maybe they don't want to go back to being surrounded by younger families and kids in the street. Maybe they're in a neighborhood with neighbors that all have mostly grown kids now and like having the peace and quiet back, and the matured landscaping. This also speaks to the renter issue.
Years ago when apartments were booming (still are by the way), the more luxurious they were, the more focused on the "renter by choice" demographic they became. That target was primarily on the empty nesters. The idea that Baby Boomer Paula & Jack were ready to sell their suburban home and come to the city core on a luxurious rental with a door man and concierge service in the lobby. But there was a problem in the thinking - empty nesters want to make sure they're not sharing a common wall(s) with someone who is not at their same place in life. I'm speaking to the age-restricted platform, which you're seeing more and more of now as the second coming of the "renter by choice". If I'm comfortable in my existing home, I know my neighbors and we like each other, and it's not a financial burden to remain, then why would I want to risk it? I wouldn't, until I have no other choice...
Another focal point with the baby boomers not selling is due to cost to compete, and quite frankly, the growing unwillingness of the coming-up crop of buyers to pick up a hammer and create some value themselves. Houses age, styles and trends come and go. Baby Boomers set their places up years ago the way they liked it, and have essentially lived with that style for the past 10+ years. They get a bit of a shock when they hear what the market would be willing to pay for their house today via the lense of a fixer-upper, and don't like the idea of doing (or paying for) the work needed to command the price they think it should command. They see what new construction commands from the market, but discount the fact that new construction has the current favorites in terms of bells & whistles. So, they stay put and continue on being comfortable where they are. They face the issues of either replacing the old HVAC unit, water heater, appliances, refinish the wood floors, updated paint colors, or discounting the price to compensate. Once they add up that math, they don't like the end result number enough to move. "Why would I waste $10k for someone else's new HVAC unit when this one still works fine?"
Here are a few examples in my market, which remains one of the hottest in the country (N. Virginia outside of Washington, DC). And if Amazon HQ2 hits, it'll be insanity at it's finest around here!
3 years ago I bought a McMansion from a former AOL.com executive who was the original owner since it was built in 2000. Walking into it the first time was like walking into an LL Bean catalog with The Backstreet Boys as models. They did nothing to the house. It measures roughly 7,000 SF when including the 3-car garage (a true 3-car). 0.38 acre lot in premium gated community. By current standards, the house was cosmetically left for dead, but structurally sound like a tank. It sat on the market for nearly 9 months, and the listing agent without actually telling me, told me it had received 0 offers. So I low-balled, played on the seller's desperation, and won.
Today, a new construction home in my market with less than half the finished square footage on a 0.06 acre lot (nearly zero setback) costs roughly $120,000 MORE than what I paid for my house 36 months ago. Unfinished basements and a 2-car garage, assuming those two cars are Mini Coopers. The new home is not nearly as well built because throughout the recession, certain "value engineering" aspects made it through the county code office to become the new standard. For example - distance requirements between the wall studs. Mine is 14 inches. The new is 18 inches, some parts of a home 24 inches. But, even though that new home is primer white throughout, it doesn't have a "time stamp" on it's decorative style yet. So, the younger crowd goes for it and willing to pay a premium on it.
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