Will ‘Baby Boomer Sell-Off
Housing values may fall as baby boomers die off or sell off, two studies say, Will baby boomers turn into party poopers when they unload their homes in large numbers starting in the next decade?
Could they create an indigestible oversupply in the market that lowers home prices and frustrates sales?
Downsizing baby boomers who are leaving homeownership behind may send shock waves throughout the real estate market, two new studies warn.
“Homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners,” according to Fannie Mae’s Economic Strategic Research group.
A separate study says the significant number of older owners in relatively large homes in the Washington, D.C., market may lead to a “baby boomer sell-off” that could be mirrored in others parts of the country.
Baby boomers—those born between 1946 and 1964—own two in five homes in the country. The generations following them occupy only about 14 million homes.
Eventually, health or other issues will force baby boomers to move. Between 2016 and 2026, as many as 11.9 million older owners will end their homeownership status, according to estimates by Fannie Mae. From 2026 to 2036, another 13.1 million to 14.6 million will move as well.
Downsizing baby boomers face a key decision: Is it better to rent or to buy? Chapman believes that large numbers of higher income renters and owners may be interested in trading up in the years ahead, thereby limiting the potentially negative impacts on prices and sales from the coming oversupply.
Researchers in the Fannie study warn that this generational unloading of homes could be “negative for the home sales market.” Upcoming generations may not have the desire or be unable financially to buy the homes baby boomer are leaving behind.
But it’s impossible to forecast price impacts 10 years ahead, “We do not mean to be alarmists,” while noting that hopes the issue will prompt more consideration for public and private policies that may cushion the potential fallout. Points to financing programs, for example, that could help urge more millennials to buy their first homes.
Lawrence Yun, chief economist with the National Association of REALTORS®, is not predicting such doom and gloom as a result of a baby boomer sell-off. There should be “no measurable declines” from baby boomers, he says.
What does all this mean for you? At the very least, be aware of the issue. And think about devising a strategy for dealing with whatever scenario seems most realistic, whether you’re an owner or future buyer.
Now is the Time to Sell or Buy, We have a wealth of information and 18 years of experience to help you get started. Visit us at WWW.PrecisionReal-T.com or if you prefer a more personal touch Call us today at 801 809-9866.
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