THE REAL ESTATE GENERATION GAP
With baby boomers soon ready to retire and the state's population growth stagnating, who will be around to buy our houses when we're finally ready to sell? Experts predict a dangerous glut in real estate inventory is possible -but there is some hope.
By MARY CARMICHAEL | March 25, 2007 | bostonglobe.com
Bill McInerney had a million-dollar house, and he hated it. The 1½-acre lot that constantly needed raking and mowing and shoveling, the multiple bedrooms and big kitchen that were too much for one person, the half-hour commute from Dedham to downtown Boston –none of it suited him. He didn‟t even like the quiet. “I‟m a city boy,”he says. “I want to hear cars and fire trucks and ambulances.”So a little more than a year ago, approaching his 60s and rattling around the halls alone, he started thinking small. McInerney found a one-bedroom apartment in Brookline under the shadow of the Citgo sign, a “lower end”place in the high $300,000s that he nonetheless loved for its location, with “13 restaurants and the streetcar right across the street.”He sold his white elephant in Dedham to a family of seven for a little under a million, “just as the real estate market started to go down the tubes.”He never wants to live in a big house again, he says, and he doesn‟t miss his old one either.
He may be lucky he sold when he did. The 57-year-old is at the older end of the baby boom generation, which is now between 42 and 61. Most boomers will partially or fully retire in the next two decades, and as their lifestyle slows down, so will their desire for the huge houses the wealthier of them have been snapping up in the past few years. Many will have the same idea as McInerney –to unload those houses –which means the number of McMansions for sale is about to get super-sized.
But who‟s going to buy? Generation X, a.k.a. the baby bust, is largely uninterested in sprawling suburban homes. And there aren‟t nearly as many Xers as there are boomers. There just won‟t be enough potential buyers unless the Xers and the older members of Generation Y are joined by a flood of new immigrants who both want the boomers‟ houses and are able to pay for them. If that doesn‟t happen, prices at the high end will sink.
The article, found here provides data and analysis and background (i.e. context) for these points. In short, we are being shortsighted, and allowing our communities to be made LESS viable in the long term, by not paying greater attention to current building trends.
If there‟s no way to save those boomer houses (and thus those boomer retirement funds), is there at least some way to make sure that prices for the smaller homes don‟t go skyrocketing past the means of the middle class? “What we really need [more of] is three-bedroom, 1½-bath homes, the kind that were built for the returning vets after World War II,” says O‟Connell. Here, then, is a possible future role for the home builders who are starting to see the market for “faux chateaux” evaporate: They could redirect their efforts into building more modest homes.
But wait, there's more:
There‟s just one problem, adds O‟Connell: “Those homes are the most difficult to build, because the community doesn‟t want them.” Wealthy homeowners who fund local school districts with their property taxes usually don‟t want to open their neighborhoods to lower-income parents, who would reap the benefits of good schools while paying comparatively less for them in taxes. “Nobody,” says O‟Connell, “wants to educate those kids.” In the long run, though, says Myers, opening up might be the only viable long-term strategy that could save the big houses. Better-educated kids grow up to be richer (read: home-buying) adults. In his new book, Myers writes that by paying for public education now, the rich can create a more prosperous class of home buyers for the future. So far, though, he says, “they don‟t get it, even if it is in their best interest.”
Time to wake up, Wake County.