The real estate generation gap
I’m a baby boomer and proud of it. My generation has essentially controlled the economy from the day we were born and will continue to do so until the day all 76 million of us go to the great beyond. We have influenced everything from baby food to the Dow Jones average, but perhaps the area we have been most influential is in the housing market.
There is, however, just one little glitch in my generation’s powerful real estate position. It’s starting to appear that Generation X that is supposed to buy our homes either doesn’t want to or isn’t able to. This real estate generation gap is starting to be obvious as baby boomers who are nearing retirement age are looking to sell their homes. The problem is many of these homes are either not what Generation X buyers want, even if they’re at a stage in their careers when it’s time to purchase a home.
Baby boomers’ typical real estate cycle was to start out with a modest first home to raise a family, upgrade to a new and/or larger house, and then as retirement nears, to relocate or move to a smaller home. In addition, negatively impacting boomers’ ability to sell and move on is that many of their move-up homes were purchased during the expansion of the 1990s, when home values were experiencing double or triple annual appreciation.
As a consequence of this growth, many boomers are in the unfortunate position of either selling at a discounted price or not being able to sell at all. Further complicating the real estate generation gap is that many boomers were planning to either partially or fully fund their retirement with the equity in their homes, leaving a lot of boomers literally holding the bag that is their property.
There is some good news, however, on the real estate front that could help baby boomers. The national October home prices rose 6.3 percent compared to a year ago. This is the largest yearly gain since July 2006, indicating signs of a comeback in the market. The number of home sales has also increased on a year-over-year basis by 6.3 percent for October 2012 compared to October 2011.
This trend is reflected across the country with 45 states reporting rising values in October, which is up from 43 the previous month. Also the 100 large metro areas that are routinely analyzed showed only 17 reporting a price decline. The National Association of Realtors credits a combination of low inventory, low interest rates and high cost rentals resulting in a high level of demand for housing. The one thing limiting even more progress continues to be overly tight mortgage qualifying standards.
Locally the North Port-Bradenton-Sarasota home prices including distressed sales increased by 8.2 percent in October 2012 from October 2011. When CoreLogic, a real estate analysis company, compared October 2012 to September 2012 in the same area, the increase in sale prices was 3.2 percent.
The housing market could very well be the one area where the boomers have out smarted themselves. If there’s no market for a product you want to sell, it doesn’t much matter what its worth to you. That being said, many of those lucky Baby Boomers, who have the ability to move on with their retirement, will be looking at areas like Anna Maria Island where the market is booming with baby boomers.
