Have you been curious about the impact that retiring Boomers are likely to have on the market for real estate? Dowell Myers, a professor of urban planning at USC, was curious too. With funding from the Fannie Mae Foundation, he recently completed a meaty study -- Aging Boomers and The Generational Housing Bubble -- that can be downloaded from a link at his web site. His"takeaway" message is that Boomer retirement "could signal the end of the postwar era" for land use planning and "reverse several longstanding trends." (Warning: Depressing news to follow.)
Myers opens by noting the ratio of seniors to working-age homeowners is expected to grow quite abruptly, rising by more than 30% in each of the next two decades. As a result, the study predicts, there will be a glut of resales in existing neighborhoods with more sellers than buyers for quite awhile, forcing a major shift in real estate trends.
Among the trends he and his colleagues foresee: an increasing decline in impacted neighborhoods, decreasing gentrification in older areas, less demand for low density housing, and an increasing emphasis on compact development.
I'd agree with the professor's take on higher density in new construction if only to make it more affordable for our offspring who may be less affluent due to the shifting economy. But since we will also have a huge existing inventory of bigger homes on larger lots, I suspect there might be increasing interest in older neighborhoods once nostalgia kicks in and real yards with trees start to seem rare.
Of course, my take begs the question of how many in the Next Gen will be able to afford to buy Daddy's house, or whether Daddy can cut his asking price below his mortgage balance. So Meyers may be correct to suggest that a long-term glut of unsold homes lies ahead, no matter how much the buyers and sellers might wish to seal a deal.
Click here to read more about it. (And thanks to Mike Miller and his "Retirement Revised" blog for leading me to it.)