Boomers in the whole market
By Justin
Hunter
There has been confusing assumptions lately about the
baby boomer generation’s role in the real estate
market. Popular belief is that baby boomers are the
king’s of the second home market. While they do
own second homes, they do not necessarily deserve a
crown, nor do they deserve to be neglected from various
other real estate involvements.
Realty Times columnist, Broderick Perkins, explains
how baby boomers are involved in just about every real
estate aspects just like many other demographics, in
his article, “Baby
Boomers More Than Second Home Market Makers,”
which was posted October 25, 2006.
“Today's baby boomers are just about as likely
to unload a second home as they are to buy one and they
aren't any more likely than their parents to own additional
properties.”
A recently released study of home owners 50 years old
and older, “Housing Trends Among Baby Boomers,”
conducted by the Mortgage Bankers Association’s
finance research department (Research Institute for
Housing America), states that the growth of second home
purchased by baby boomers are only due to the growing
number of baby boomers themselves and not because they
have an “appetite” for second homes.
So, yes, baby boomers do have a major claim in the second
home market but not for reasons originally believed.
They just happen to have disposable income and are a
growing demographic.
“The real impact of baby boomers is that they
own homes at a higher rate
than other population groups, their listings help keep
the market supplied with re-sales and those looking
to move down from empty nests or over to a second home,
are a key source of housing demand.”
The housing economy is largely dependant on baby boomers
because their established home equity amounts counts
for the most significant amount of non-pension household
assets.
The study also uncovered some interesting facts and
trends about baby boomers in the housing market.
“Only 15 percent of homeowners
50 and over also own a second home.”
The study also concluded that 50- to 60-year-old baby
boomers were no more likely to own second homes than
older generations, comparatively speaking.
However, boomers that do purchase second homes can usually
afford to do so as a result of the large amount of equity
they have accrued throughout the years.
“Most baby boomer second-homes aren't mortgaged.
Owners either inherited their homes or purchased them
with cash. Second-home mortgage originations comprise
only about four percent of overall mortgage market originations.”
Second homes are also not viewed as an important aspect
of a household’s financial
portfolio. Second homes are often used for seasonal
recreation rather than an investment.
Baby boomers should be recognized for supporting the
real estate and housing market for many years and will
continue to do so until the generation ends, but the
study suggests that labeling them as only second home
owners is a misstatement.
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