Another wrench in the works.
There are many variables that are affecting this market from mortgages and the mindsets of buyers and sellers. But there has been one development that I have been watching very closely and have been concerned about for quite awhile. That factor is are the Baby Boomers.
I got this from another blogger who hits it dead solid about why the baby boomers are a development that should not be taken lightly.
Baby boomers - the X factor that may get things even worse
I haven't seen any research on how this huge population segment may affect the real estate, but considering that almost all of boomers have kids out of high schools, and in colleges by now, they are likely to sell for several reasons:
- to finance their kids college education
- to move into warmer or colder climate
- to indulge themselves in the golden years
- to simply downsize
Finally to stop paying insanely high real estate taxes they don't need anymore, since their children don't need the best high school money can buy. Considering that there are about 35 millions of baby boomers, and only 1%, which is 350,000, of them will have to sell quick, the impact on sale prices can be quite severe.
What makes this a TARFU is the fact that is the year 2007. This is when the Baby Boomers start turning 60 and retire en masse. That is if they have the resources to do so.
There will be a growing trend of boomers of withdrawing from their former routines and embarking on the next stage of their lives. Unfortunately this requires cash and alot of that cash is locked up in their homes. And with a tanking market, their timing couldn't be worse. These boomers will have to make some hard decisions which means taking a loss and drop prices, pull the old reverse mortgage trick or simply lock themselves down. Each of these choices are not very attractive.
Even Federal Reserve Chairman Ben Bernanke is freaked out by the Boomer situation.
However, as cruel as this may sound, there is a way for buyers to put this to their advantage. A seller who is blocked from entering their golden years maybe more flexible in lowering their price.
This is going to suck.
I got this from another blogger who hits it dead solid about why the baby boomers are a development that should not be taken lightly.
Baby boomers - the X factor that may get things even worse
I haven't seen any research on how this huge population segment may affect the real estate, but considering that almost all of boomers have kids out of high schools, and in colleges by now, they are likely to sell for several reasons:
- to finance their kids college education
- to move into warmer or colder climate
- to indulge themselves in the golden years
- to simply downsize
Finally to stop paying insanely high real estate taxes they don't need anymore, since their children don't need the best high school money can buy. Considering that there are about 35 millions of baby boomers, and only 1%, which is 350,000, of them will have to sell quick, the impact on sale prices can be quite severe.
What makes this a TARFU is the fact that is the year 2007. This is when the Baby Boomers start turning 60 and retire en masse. That is if they have the resources to do so.
There will be a growing trend of boomers of withdrawing from their former routines and embarking on the next stage of their lives. Unfortunately this requires cash and alot of that cash is locked up in their homes. And with a tanking market, their timing couldn't be worse. These boomers will have to make some hard decisions which means taking a loss and drop prices, pull the old reverse mortgage trick or simply lock themselves down. Each of these choices are not very attractive.
Even Federal Reserve Chairman Ben Bernanke is freaked out by the Boomer situation.
This huge wave of retirees will hit the U.S. budget as well as the economy, Bernanke said.
"The longer we wait, the more severe, the more Draconian, the more difficult the objective -- the adjustments are going to be. I think the right time to start is about 10 years ago," he told lawmakers when questioned about the urgency of the situation.
However, as cruel as this may sound, there is a way for buyers to put this to their advantage. A seller who is blocked from entering their golden years maybe more flexible in lowering their price.
This is going to suck.
posted by Grunt at
9:19 PM
