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I would like to throw out a subject that I have some concerns over. That is the aging baby boomer population and what it means for the value of the single family home in the future.
The baby boomers range in age from 44 to 61 years old. In the next 10,20 or 30 years I suspect many of them will be moving to condos,villas, assisted-living, nursing homes and eventually perishing. Talk about a popping bubble, what happens when all these houses are on the market? What does this do to the long-term prospects of the housing market?
Maybe the answer is to invest in long-term care facilities. But I want to stick to the single family house.
I have had people tell me ?but the population is ever increasing, their will always be people to buy the houses? I believe that is true but at what price will they be a buyer?
The baby boomers as whole are a relatively affluent group. Can that be said for Gen-X.
We all know what an increasing supply and soft demand does to the price of anything.
Any opinions would be appreciated.
Mark Wimmer
Mark,
You pose a great question for discussion on the forum.
The missing piece from your analysis is that many of the baby boomers will be retiring with no savings, no pension and no ability to work any longer because they have very poor health.
This will force them to move in to more affordable housing.
I’m already seeing it here in Texas. People are selling their houses and buying used mobile homes.
A very high percentage of my renters are over 55 …. and they are DOWNSIZING from a $1500 a month rental to a $1100 a month rental. Many of them have never owned a house and have no plans to. What’s going to happen to them when they can’t work anymore and they still have a monthly rent payment?
There’s a great book called “The Coming Generational Storm” that explains how the tsunami of baby boomers will need even more help from the government – but the agencies like Social Security and Medicare are already maxed out and the only way to solve the problem is to increase taxes and reduce benefits.
What happens to the person who thought they were going to get $2000 a month in social security but find out that they will only get $1000 a month? ( work at Walmart)
Sure, there will be a certain amount of baby boomers will move in to nice retirement communities where they can play golf every day. But I think a much higher percentage of baby boomers will be downsizing and worrying about how they are going to buy groceries and the medicine they need to survive.
A popular alternative to an assisted living facility here is a single family house that is turned in to a group house.
What you are charging for monthly rent, you can get for EACH bedroom in these types of arrangements.
Ideally, you would rent the whole house to a non-profit or similar agency who has responsiblity of management. You don’t want that liability.
I remember one of Jimmy Napiers audios talked about setting these up.
Jackie Lange
From Jack Miller:
Over the years countless books have tried to forecast the megatrends without much success. Twenty five years ago the declining birthrate was cited as the basis for a surplus of housing. It overlooked the fact that houselholds, not children, create the demand for housing. With almost half of all marriages ending in divorce, and with the rise of single parents, this has been the driving force behind household formation.
No doubt the boomers will impact housing, but probably multiple units rather than singles. What’s more to the point is that mega-statistics have little to do with current opportunities in housing because in almost every case, the local market situation dominates demand.
Possibly the most telling demographic is that 50 million people will have moved from North of the 38th paralell to the Southern States. They’ll need housing and infrastructure. If your area is growing in population and in average household income, you’ve little to worry about. If it isn’t, sell out and move while there’s still a market for your houses.
If you don’t believe me, take a trip through Northern tier States from Idaho to Maine and see what’s happening to real estate prices. Stated another way, have I got a deal for you on 54 waterfront lots in Maine.
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