Economists: Aging Baby Boomers will Depress Housing Market for the Long-Term

Current housing woes notwithstanding, economists are looking ahead five years when the 78 million baby boomers enter their twilight years. As this happen they will increasingly become sellers of real estate which is expected to result in significant downward pressure on housing values. For the past 30 years when a baby boomer sold a home there was likely a corresponding purchase of a home by that seller--keeping things in balance. This is generally true when people are in their 50s and 60s as most boomers are now. But later in life, more and more sell their home and either move into alternate housing or perhaps with a family member. In fact, when a person hits 75 they are three times as likely to be a seller than a buyer. This has always been true but what is different now is that that the post-war population bubble is nearing this tipping point. This could cause a significant imbalance in the market and depress housing prices for the long-term.

Not everyone is in agreement with this assessment and in fact this has been predicted before only to be proven false. But it is hard to argue with the aging demographics of the country nor the eventual sale of homes that will result. This will not only impact seniors who are trying to sell their homes in what might be a difficult market but also those who are planning on tapping equity to pay for their later years.

This is yet another argument to start retirement planning sooner rather than later and to consider using professional managers to help in the process. Home equity has been golden for the past thirty years but it is dangerous to have all of your (nest) eggs in one basket, espeicially something so illiquid.

Source: Los Angeles Times