Boomers and real estate
If you consider almost any major trend, you need look no further than the Baby Boom generation to figure out what's sparked it. The trend of note today is the huge number of second home sales that is fueling the real estate boom. According to the National Association of Realtors, more than one third of all homes sold last year were second homes -- bought either as vacation homes or investment properties (and often both, I'd guess).
Melanie Norden, a realtor writing from San Francisco, has an explanation.
"As a realtor here in San Francisco I witness demographic trends first hand everyday in our market. A significant trend now fueling purchasing of condos in new areas of density is that of recent empty-nesters in the 48-59 age group beginning to shift away from suburbs and second homes into luxury urban dwellings with walking distance conveniences and entertainment.
Boomers have witnessed their parents' difficulty with driving, and the subsequent isolating effects of such aging issues, they are shopping for new solutions for when those issues visit their generation. Desire for convenience, and ease is linked with a desire to explore City excitement and culture, empty-nesters are ready to graduate and attend national touring plays rather than school plays. Cities such as San Francisco offer condos with luxury amenities -- pools, jacuzzi, fitness rooms, within walking distance to world-class restaurants, museums, professional ball parks, shopping and services. Markets such as Phoenix represent boomers buying a test-run retirement home before quitting work all together.
Beyond the boomers are those in active retirement who enjoy easy access to amenities and conveniences that condo/hotel models offer while being in a location that's a great draw for children and grandchildren to visit; I have buyers in their 70's with this strategy."
That all makes sense. The only question is, what happens when the Boomers start to retire, sell their primary residences and settle into the second homes they are buying now? Where will that leave the real estate market?
TrackBack URL for this entry:
Agree for 100%
Posted by: Norden real estate at August 24, 2005 09:20 PM
I'm worrying about exactly what you have described. Will the Boomer's Primary homes flood the RE market as they retire and move on?
I've juist sold my primary home and have purchased a cheaper one in an attempt to minimize my equity risk. I may be kicking myself next year, but I think the market has peaked and will become stagnant or even fall. Who knows? Only time will tell.
Posted by: Bill Endress at September 29, 2005 03:04 PM
Posted by: real estate appraisal at October 8, 2005 05:53 AM
Posted by: Stratrobski Aranavoroloschovoloski at November 1, 2005 11:09 PM
When I worked for a magazine called "50 Plus," aimed at the mature market in the mid-80's, I thought exactly like Bill -- that the Boomers retirement and migration to retirement havens might crash certain suburban housing markets. Twenty years later I no longer have that same outlook.
While real estate development, and now redevelopment, are guided by the "highest and best use" rudder -- we've recently seen such a redevelopment district able to secure private property through a winning case at the federal Supreme Court level -- our population is expanding by immigration and new generations with new ideas.
What has occured and developed over the last 20 years that affect both buying and selling?
1) Technology; cell phones, and the internet explosion have allowed some of us to work from remote locations -- delivering that excel spread sheet from Vail during ski season, or conference calling from any Hawaiian beach. And with what the dot-bomb market did to boomers 401Ks -- and the coming death of corporate pensions -- retirement won't have the same definition that we gave it in the 80's.
2) Immigration and changing demographics; another trend in this same 20 year period has been the resurgance of X-urbs, and in-fill in urban areas (live/work lofts here in San Francisco displaced light industrial). Another interesting trend; Silicon Valley option workers are now opting for larger families -- up to 4 kids --stay at home moms and big homes to accomodate those choices. Back to the 50's -- with a contemporary twist? We live in interesting times.
These trends affect both buying and selling motivations in the market. I don't see people selling their primary residence and then packing it in for retirement. They are cautious, taking tours through Annapolis, Florida, Mexico, Texas, and many more prospective retirement ports.
They are postponing the decsion, but enjoying the process. Here in San Francisco I see families hanging on to Grandma, and Ma's, and their properties, which doesn't do any good for our housing stock. But we've all left our hearts here.
Posted by: Melanie Norden at November 18, 2005 07:56 PM