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Photo by Ryan McGuire
Who holds the buying power?
A new study by research firm HouseCanary
states that the buying power is still in favor of the Baby Boomers. for they hold a greater for-sale investment opportunity than millennials.
This should come as no surprise, as many millennials are still struggling with purchasing their first homes as well as paying off student loan payments. HousingCanary states that Baby Boomers (aged 55+) have been the strongest driving force of household growth this past year, with 224% in national growth. What this study suugests is that the shift in demographics are redefining our focus in real estate. In other words, Baby Boomers are more likely to reshape the market's current status and future in real estate investment, not millennials. Millennials, on the other hand, are going to face even slimmer chances of obtaining homeownership when interest rates hit 6%. It's estimated that 1 in 3 millennials may no longer qualify once that happens. "Demographic shifts are causing significant change and new opportunities for real estate investors," says HouseCanary CEO & Co-founder Jeremy Sicklick. "Our research indicates greater opportunity for development of for-sale residential to the aging population and for-rent residential to serve the younger generation."
Myths about the boomer market
Here's an article
that talk about the myths about boomers and what it means for the real estate industry. For example, there's the idea that a huge percentage of baby boomers flock to warmer, sunnier weather. What we come to learn is that this is just a myth. Based on the results of a new Merrill Lynch/Age Wave survey, 83% of those surveyed aged 65 years and older remained in the same state when they moved. Another myth about the baby boomers once they hit retirement is that boomers often seek smaller homes such as condos and apartments. You'll be surprised to learn that only about half the people surveyed actually downsized from their previous home. About 30% of boomers who moved since retiring actually moved to larger
homes. The main reason? Extra spare bedrooms for family and friends who want to visit.
Still going strong
What the real estate market is learning from baby boomers is that this is a market that is still going strong. It's a market that can't be ignored. Demographic and social shifts have made the industry focus more on younger generations, often forgetting that the boomers are steadily investing in similar to larger sized homes. Although the millennial generation is far greater in numbers than baby boomers
, this doesn't mean that millennials currently hold buying power. In fact, boomers aged 50+ is the #1 consumer age demographic and hold a large majority of financial assets
in the U.S, roughly around 60% of all American assets. With more discretionary income
than any other group, Baby Boomers continue to be the largest buying group in America. If there's ever a question as to whether or not Baby Boomers can keep up with the real estate market, think again.