The boomers were supposed to keep the housing market strong. At least that is what they said back in 2006. That didn’t happen. Why?
After all, this was the largest portion of the population. They were all going to be downsizing and looking for new housing as they eased into retirement. What happened? Well, when the housing recession hit in 2008 their investments starting taking a hit as well as their little nest egg; their home. There is no doubt homes were radically over valued back in 2006 but for many of the boomers, watching the value of their biggest investment drop was a scary proposition. Sure, they wanted that new smaller more efficient home or condo but they could possibly walk away from the perceived loss of value in their home. After all, they were planning on retiring soon, maybe even get a second home or vacation more.
Those that couldn’t wait saw their homes that they lived in for many years and raise their families in sit on the market. Even after reduction after reduction nothing seemed to happen. Many got frustrated and took their homes off the market. Others saw their children who have left return to co-habitate with them. After all they could postpone their purchase, right?
Many did just that, and now more are coming into the market. According to CNN data Boomers make up 24.3% of the total U.S. population of approximately 315,000,000 as of 2012. So they clearly are a large segment of the population. Although the housing market may have heated up and prices have been generally climbing very slowly, the values have not nearly made up the perceived values of 2006. Why are they still jumping in the market?
Well many just can’t wait it out any longer. Health concerns have pushed many of them forward into smaller homes and condo life. The need for accessible homes is still very much there. Others simply could not wait any longer and decided the cost benefits of downsizing were worth the financial loss. Many have also seen their stocks climb back up in value and feel more comfortable with their financial position and their prospects of retirement.
Regardless of the reason, there is still a large contingent of boomers that have not hit the market. The question now becomes, is there enough or the right product on the market? New construction homes keep getting larger, and there is a lack of quality inventory on the market. This alone will make purchases for this group difficult. One of the biggest factors is affecting boomers these days is developers who worked on multi-family in the past have either shelved or converted their properties to single family as the multi-family market was hit worst of all in the market decline. Choices are slim these days and it’s going to take awhile to rebuild or unearth those types of projects. Multi family usually takes a lot more planning and legal work, and there are a lot less of those builder/developers in this market than single family.
Not only will there be a large quantity of boomers on the market, they will also be well funded. Approximately $8.4 trillion will be inherited by boomers from their grandparents, parents and others. The boomers will be a strong force in the market for years to come. The question is are we ready for them?