The Bipartisan Policy Center recently released a report that detailed how senior citizens and young adults will impact the real estate market over the next 20 years, which should be addressed by housing policy given the challenges both demographics face as a result of the economic crisis.
The 52 page study stated that the size of the Baby Boomer generation will create a demand for affordable and independent housing for seniors. But, while they will create a demand for such housing, they will also be adding to the housing inventory as they begin to sell their homes to downsize.
According to the Executive Summary of the study, “The increase is likely to be felt most acutely in the housing markets of the Northeast and Midwest, where the number of older homeowners seeking to sell their homes already accounts for a large share of the houses bought by younger homebuyers.”
Children of the Baby Boomer generation, colloquially known as Echo Boomers, those born between 1981 and 1995 will account for 75% to 80% of homebuyers purchasing the homes being sold by those of their parents generation. The study states that this generation are struggling as they have entered independent adulthood, which has limited their ability to purchase a home. The study is detailed and addresses other variables like ethnicity and rental properties. It also stops short of stating exactly how these challenges need to be addressed. It only explains that housing policy will have an impact on the real estate market over the next 20 years.
This fluidity and uncertainty mean, together, that decisions about the shape of housing policy in the U.S. – especially the finance system and tax incentives for owner-occupied and rental housing – stand to have a potentially large effect on the shape of the future U.S. housing market. Housing policies will likely affect individuals’ decisions about whether, when and with whom to form households. Even more, the housing policies that emerge by the end of the 2010s will influence whether many households buy or rent, where they decide to live and whether houses currently owned by Baby Boomers are sold, rented or leave the housing stock entirely. Whether for newly forming households or long-established ones, therefore, housing policies that emerge by the end of this decade have the potential to affect significantly the wealth portfolios of tens of millions of American families.
If you are looking to buy or sell a home in western Massachusetts, call Michael Seward at 413-531-7129.