For the Love of . . . Baby Boomers
Baby boomers, people born between 1946 and 1964, represent 28% of the US population.
In Cooper City, 24% of the people were born after 1946. Seventy-four percent are homeowners and only 26% are renters. In Davie, the percentages are similar.
This could account for our low inventory (5.3 months of single-family home inventory for Cooper City and Davie). According to the Daily Real Estate News, some economists say the baby boomers aren’t selling their homes like previous generations did and not downsizing fast enough, which is leading to shortages of homes for sale and rising prices.
Baby boomers are big players in real estate. In 2013, people age 55 and older controlled two-thirds of all home equity, according to the Federal Reserve’s most recent Survey of Consumer Finances.
In previous generations, once the kids have moved out of the house, empty nesters tended to downsize and move to smaller homes or rent apartments. But so far, boomers haven’t made a move. It could be that boomers like a place for their children and grandchildren to stay during the increasingly long winter months in most parts of the US. However, many boomers upgrade to a luxury condo – the lock-n-leave concept. These homeowners may not necessarily leave South Florida, but they will eventually give up their single family home for a much more carefree lifestyle with built-in amenities.
“Economists say boomers’ slower-than-expected rate of downsizing and selling is playing a contributing role in supply, demand and pricing imbalances in local markets — not creating those imbalances,” The Washington Post reports.
Lawrence Yun, chief economist for the National Association of REALTORS®, told The Washington Post that the lingering effects of the housing crisis and the Great Recession may be the reason why more baby boomers are postponing their moves. From 2008 to 2011, home owners of all ages lost lots of equity and many home owners may still be rebuilding equity to allow them to sell and move without having to bring money to closing, Yun says.
In 2014, the economy was STILL the boomers, and represented the vast majority of the work force. There are 76 million boomers, and boomers are still the economy. The huge growth in the economy since the 90s was due to 76 million working up to their peak earning and spending years.
But Fannie Mae’s Patrick Simmons, an economics and strategic research group director, says that the “jam” in the real estate pipeline from baby boomers not moving will not likely hold for much longer. “Boomers will not inhabit this vast inventory [32 million homes nationally] forever,” he says. Their circumstances will inevitably change with age and they will move, and “their actions will reverberate through the housing market.”
Therefore, now is the time to get your home on the market, while inventory is low and prices are rising. In the industry, we hear rumors about rising mortgage rates, which would affect buying power.
If you are a boomer, it may be time for you to partake in the the lock-n-leave, carefree lifestyle.