The baby boomer generation has been in the headlines of the real estate industry more and more as second homes or investment properties gain exposure. The real estate has been struggling since the beginning of 2006 and it is the baby boomers that are essentially carrying the market afloat, preventing a crash.
Regardless of the interest rates and home prices, baby boomers will continue to be active in the housing industry as they have disposable income and want to make investments for their whole family to enjoy.
The article, “Baby boomers drive second-home market” posted on Inman news, provides statistical information on how baby boomers have become agents’ best friend.
“About 25 percent of baby boomers own one or more types of real estate in addition to a primary residence, and boomers own 57 percent of all vacation and seasonal homes and 58 percent of rental property, according to a survey conducted by Harris Interactive for the National Association of Realtors trade group.”
An even more impressive figure is that baby boomers’ (typically born between 1946-1964) net worth is more than 50 percent tied up in home equity for middle-income boomers and that percentage skyrockets to 90 percent for boomers earning $100,000 per year and more.
“‘Most of the 78 million baby boomers are far from retirement, with diverse plans and timelines resulting in different housing requirements and significant shifts from patterns established by earlier generations,’ the Realtor group reported.”
The survey also concluded that a significant amount of baby boomers married and had children later in life, which results in the want and need to work beyond the traditional retirement age. And about 33 percent of retired baby boomers plan to flip flop from retirement and part-time work. The survey reported that the median age a baby boomer will retire is 70, although 27 percent of these boomers plan to never retire. The longer boomers work, the more retirement or leisure money they will have.
This actually relates to baby boomers buying less retirement and second home now than in the future. This is great news for the industry since baby boomers are already supporting a large sector of the housing market, and in about 10 years boomers will own even more property.
“Thomas M. Stevens, NAR president and senior vice president of NRT Inc., said in a statement that the survey shows most boomers want professional services when they buy real estate. ‘When buying a home, they want agents to represent their interests in the complex transaction process, and when selling they want help to establish the right asking price. Regardless of whether they’re buying or selling, boomers want agents to explain all of the complicated contracts, forms and agreements, to manage the closing process from start to finish, and to negotiate on their behalf,’ Stevens said.”
With 25 percent of baby boomers having a net worth of over $500,000, there is a lot of disposable income out there for real estate agents and mortgage lenders to rest assured for many years to come that the market will be fine. And once younger generations become interested in real estate again, the market will again flourish.