BABY BOOMERS.
THE PEW RESEARCH CENTER
ESTIMATES THERE ARE ABOUT 74
MILLION PEOPLE IN THAT
GENERATION AND THE MAJORITY OF
BOOMERS ARE HOME OWNERS.
THERE'S RESEARCH THAT SAYS OVER
THE NEXT 20 YEARS, THEIR HOMES
WILL FLOOD THE MARKET BUT NO ONE
WILL BUY THEM.
WHAT'S BEHIND THAT THINKING?
KATE ILES, OWNER OF MAPLE REALTY
AND PROFESSOR JOHN ROGERS OF
AMERICAN INTERNATIONAL COLLEGE
WEIGHED IN.
>> I THINK AT THAT TIME, YOU
KNOW, 40 YEARS AGO, THIS WAS THE
DREAM TO OWN A HOME.
I THINK THERE'S BEEN A LITTLE
SHIFT OVER THE YEARS, WHAT I
SEE, JUST, YOU KNOW, OUT AND
ABOUT WITH CLIENTS IS THAT
MILLENNIALS ARE A LITTLE MORE
HESITANT TO BUY.
FOR ONE THING, EVEN IF THEY WANT
TO BUY, IT'S A LITTLE MORE
CHALLENGING.
FINANCING IS MUCH MORE
DIFFICULT.
>> YEAH.
>> THAN IT USED TO BE.
I ALSO THINK WHEN THE MARKET
DECLINED, MILLENNIALS SAW THAT
THEN YOU WERE REALLY STUCK WHERE
YOU ARE SO BUYING REALLY TIED
THEM INTO AN AREA.
SO IF THEY NEED TO CHANGE JOBS
OR WHATEVER, THEY WERE A LITTLE
LOCKED IN.
>> THEY'RE RELUCTANT TO MAKE
THAT INVESTMENT.
>> I'VE SEEN THAT A LITTLE BIT,
YEAH.
>> THERE'S BEEN A LOT OF
REPORTING LATELY ABOUT BABY
BOOMERS AND THIS FLOOD THAT
THEY'RE GOING TO CAUSE IN THE
MARKET BECAUSE THEY'RE GOING TO
SELL THEIR HOMES.
BUT WHAT'S THE THINKING BEHIND
THAT?
>> WELL, THE BABY BOOMER
GENERATION OBVIOUSLY DROVE A LOT
OF THINGS INCLUDING THE HOUSING
MARKET SO THERE IS A
PRE-OCCUPATION IF YOU LIKE THE
DEMAND SIDE OF THE EQUATION.
ON THE OTHER HAND, WE SOMETIMES
FORGET THE MILLENNIAL GENERATION
IS A BABY BOOM.
IT'S GOT AS MANY PEOPLE IN IT AS
ACTUALLY A LITTLE BIT MORE THAN
THE BABY BOOM.
AND IT'S A STRESSED GENERATION
BECAUSE OF THE FINANCIAL CRISIS,
BECAUSE OF STUDENT LOANS,
BECAUSE OF THE TURBULENCE THAT
WE'VE HAD IN THE JOB MARKET.
BUT EVENTUALLY, THOSE PEOPLE ARE
GOING TO BECOME SITUATED.
AND THAT'S ONE OF THE THINGS
THAT PEOPLE DO, IT'S PART OF THE
AMERICAN DREAM.
I DON'T THINK IT'S GOING TO GO
AWAY THAT PEOPLE WANT IT TO BE
EVENTUALLY BECOME HOME OWNERS
AND THEIR FAMILY FORMATION KICKS
IN.
IT'S A LITTLE BIT LATER THAN
EARLIER GENERATIONS BUT IT'S
GOING TO HAPPEN.
SO I THINK YOU DO HAVE SOMETHING
PICKING UP THE SLACK ON THE
DEMAND SIDE.
IT'S A LITTLE BIT SLOWER THAN IT
WAS WITH THE BABY BOOM AND I
THINK IT'S THERE FOR THE FUTURE.
SO I THINK THAT WILL BALANCE --
THAT WILL BALANCE THAT FACTOR
OFF.
>> TO ME, THERE'S SOME
CONFLICTING REPORTING HERE,
RIGHT?
WE'RE HEARING THAT BABY BOOMERS
WILL PUT THEIR HOUSE ON THE
MARKET.
THERE'S GOING TO BE ALL THIS
INVENTORY, ALL THESE HOMES
AVAILABLE TO BUY.
BUT IS THE INVENTORY THERE RIGHT
NOW, KATE?
>> WE'RE NOT SEEING THAT.
IN FACT, THE PIONEER VALLEY
SALES HAVE BEEN A LITTLE DOWN.
BUT MEDIAN PRICE IS UP AND
THAT'S BECAUSE WE CAN'T SELL
WHAT WE DON'T HAVE.
THERE'S NOT A LOT OF PLACES FOR
SENIORS TO GO.
D
DOWN
DOWNSIZING, WE FIND THAT SENIORS
WANT A SOPHISTICATED HOME AND
DON'T WANT TO GO BACKWARDS TO
LIKE APARTMENTS.
>> THEY DON'T WANT TO GO FROM
2,000 SQUARE FEET TO 600 IN A
CUTE CONDO.
>> EXACTLY.
EXACTLY.
THE MARKET IS A LITTLE BIT STUCK
IN THAT WAY.
THE OTHER THING WE SEE A LOT OF
THAT MIGHT BE SQUEEZING
MILLENNIALS OUT A LITTLE IS
THERE'S A LOT OF CASH OUT THERE.
IT'S HARD TO COMPETE IN THE
MARKET IF YOU HAVE TO GET
FINANCING, MAKES IT MUCH MORE
DIFFICULT.
>> IF A BABY BOOMER IS PUTTING
THEIR HOUSE ON THE MARKET, YOU
KNOW, DO WE HAVE ANY SENSE OF
AVERAGE PRICE THAT THEY'RE
HOPING TO GET?
I MEAN, WHICH MIGHT NOT BE
AFFORDABLE FOR A MILLENNIAL?
>> THAT COULD BE TRUE, TOO, YEP.
>> IF I'VE INVESTED, IF I'VE PUT
A 40-YEAR INVESTMENT INTO
SOMETHING, YOU KNOW, YOU'RE
PROBABLY WANT TO GET $300,000 OR
SO OUGHT OF THAT INVESTMENT IS A
MILLENNIAL IN THE POSITION TO
SPEND THAT KIND OF MONEY ON A
HOUSE?
>> IT'S TRUE, ON THE OTHER HAND,
I WOULD SAY THE MILLENNIALS HAVE
AN ADVANTAGE SINCE, FIRST OF
ALL, WE DO HAVE A LOT MORE TWO
INCOME COUPLES AND THAT'S THE
WAY OF THE FUTURE THAT PEOPLE
ARE GOING TO HAVE MORE INCOME
SIMPLY BECAUSE OF THAT.
SO THAT'S GOING TO HELP.
>> IT WAS ON ONE INCOME MOST
LIKELY, THE MALE OF THE
HOUSEHOLD.
>> PRIMARILY, THERE MIGHT BE A
SECONDARY INCOME BUT THESE ARE
TWO PRIMARY WAGE EARNERS FOR THE
MOST PART.
I THINK THE FINANCIAL MARKETS,
TOO, HAVE EVOLVED A LOT.
MORTGAGES AND EVEN THOUGH WE'RE
LOOKING AT INTEREST RATES GOING
UP, THEY'RE NOT PROBABLY GOING
TO GO UP THAT MUCH.
THEY'VE BEEN AT HISTORIC LOWS
AND THEY'RE INCHING UP BUT THE
10-YEAR TREASURY BILL IS
SLIGHTLY UNDER 3%.
AND NOBODY IS PREDICTING IT'S
GOING TO GO WAY HIGHER THAN
THAT.
SO YOU'RE LOOKING AT A FAIRLY
FAVORABLE FINANCIAL SITUATION
WHICH MEANS THERE'S CASH
AVAILABLE SO IT'S COMPETITIVE TO
BUY A HOUSE BUT ON THE OTHER
HAND, THEY'RE PRETTY GOOD MEANS
FOR FINANCING IT.
>> YEAH, THE DAYS OF 20% DOWN
MAYBE FOR A COMMERCIAL
INVESTMENT.
BUT NOT NECESSARILY FOR SOMEONE
WHO WANTS TO GET INTO A
RESIDENTIAL HOME, RIGHT?
>> RIGHT.
AND WE'VE SEEN, ALSO, FOR
SENIORS THAT HAVE BEEN IN HOMES
MAYBE 40 YEARS, WE'RE SEEING A
LOT OF DEFERRED MAINTENANCE AND
THAT OFTEN CAN PUT OFF A NEW
BUYER, YOU KNOW, YOUNGER BUYER,
THAT YOU KNOW, IS A LITTLE
WORRIED ABOUT THE FINANCES IN
THE BEGINNING.
THAT'S PRETTY COMMON.
AND I THINK WHAT ADDED TO THAT
IS THE RECESSION.
RIGHT WHEN THE HOMES STARTED TO
NEED SOME THINGS, PEOPLE WEREN'T
IN THE POSSESSION TO DO IT.
>> LET'S TALK ABOUT THAT A
LITTLE BIT MORE.
THE DIFFERENCE BETWEEN, YOU
KNOW, MAYBE A MILLENNIAL WHO
WANTS TO LIVE IN SORT OF THIS
WALKABLE NEIGHBORHOOD, MAYBE
CLOSER TO A DOWNTOWN.
BABY BOOMERS IT WAS VERY
FASHIONABLE TO LIVE IN THE
SUBURBS.
SO YOU ALSO HAVE THAT BIG
DIFFERENCE, RIGHT?
>> YEAH, BUT I SEE THAT CHANGING
VERY MUCH.
EVEN SENIORS WHEN WE SEE THEM
DOWNSIZING, THEY WANT TO BE IN
TOWN.
THEY WANT TO BE ABLE TO WALK TO
THEIR COFFEE, TO THEIR
NEWSPAPER.
YOU KNOW, NOT BE DEPENDENT ON
SOMEONE FOR A RIDE EVERYWHERE AT
SOME POINT.
>> UH-HUH.
AND SO WHEN WE LOOK AT THIS
TREND OVER YEARS, I WAS DOING
SOME RESEARCH AND FOUND A REPORT
FROM HARVARD IN 1988 AND IT
LOOKED AT THE SAME ISSUE.
NOT BABY BOOMERS AND MILLENNIALS
PER SE BUT BABY BOOMERS AND THE
IMPACT ON THE HOUSING MARKET.
AND AT THAT TIME IN 1988, IT
PREDICTED SOMETHING SIMILAR,
THAT BABY BOOMERS ARE GOING TO
BECAUSE OF THE 1970s THEY WERE
BUYING HOUSES, THEY DROVE UP THE
PRICE, THAT THEY WERE GOING TO
HAVE A BIG IMPACT ON HOUSES YET
AGAIN.
AND THAT REPORT SAID "THE BABY
BUST GENERATION IS NOW ENTERING
ITS HOUSE BUYING YEARS.
HOUSING DEMAND WILL GROW MORE
SLOWLY IN THE 1990s THAN IN ANY
TIME IN THE PAST 40 YEARS IF THE
HISTORICAL RELATION BETWEEN
HOUSING DEMAND AND HOUSING
PRICES CONTINUES INTO THE
FUTURE, REAL HOUSING PRICES WILL
FALL SUBSTANTIALLY OVER THE NEXT
TWO DECADES."
IS THAT WHAT WE SAW?
>> SHOWS HOW DIFFICULT IT IS TO
PREDICT THE FUTURE PARTICULARLY
LONG TERM TRENDS LIKE HOUSING
PRICES AND DEMOGRAPHY.
AND WE CERTAINLY DID NOT SEE
THAT HOUSING PRICES CONTINUED TO
GO UP RIGHT UP UNTIL THE
RECESSION AND NOW, THEY'RE
COMING BACK AFTER THE RECESSION.
AND THIS -- THE 2008 RECESSION
WAS A MAJOR FINANCIAL CRISIS.
IT JUST DID A REAL JOB ON THE
HOUSING MARKET AND ON THE
MILLENNIAL GENERATION IN TERMS
OF THEIR ABILITY TO GET STARTED
IN THE WORK FORCE.
SO I THINK IF YOU LOOK AT
FINANCIAL CRISIS THAT HAVE
HAPPENED IN OTHER COUNTRIES AND
IN SWEDEN, OTHER PLACES, IT'S
ABOUT A 10-YEAR PERIOD THAT YOU
NEED TO RECOVER FROM THOSE AND
THAT'S WHAT WE'RE SEEING.
NOW THE ECONOMY IS BOOMING AND
PEOPLE HAVE MONEY.
AND THE INTEREST RATES ARE STILL
PRETTY FAVORABLE.
SO IT'S ON THE DEMAND SIDE, I
THINK THE DEMAND IS THERE FOR
THE FORESEEABLE FUTURE.
ON THE SUPPLY SIDE, I AGREE THAT
THE INVENTORY FROM EVERYTHING
YOU HEAR ARE TIGHT.
AND I DON'T SEE THAT CHANGING A
HUGE AMOUNT IN THE FUTURE
BECAUSE OF BUILDING COSTS,
BECAUSE OF REGULATIONS, ZONING,
AND I THINK THERE WAS SOME
STUDIES DONE OF HOUSING
CONSTRUCTION OVER THE LAST TWO
YEARS AND THEY FOUND THAT IF YOU
BACK OUT WHAT WAS DONE TO
RECOVER FROM THE HURRICANES AND
OTHER NATURAL DISASTERS, THERE
REALLY WASN'T ANY SIGNIFICANT
INCREASE IN INVENTORY.
THEY REBUILT THINGS THAT HAD
BEEN DESTROYED BUT HADN'T REALLY
ADDED THAT MUCH TO INVENTORY.
>> WHAT ADVICE DO YOU GIVE
PEOPLE THAT ARE LOOKING RIGHT
NOW TO SELL, MAYBE A BABY
BOOMER, OR A MILLENNIAL WHO
WANTS TO GET INTO THE MARKET?
>> WELL, I MEAN, IN TERMS OF
SELLING, GETTING YOUR HOUSE
REALLY PREPARED FOR SALE, WE
ALWAYS USED TO SAY THAT, YOU
KNOW, LOCATION, LOCATION,
LOCATION.
THAT IS STILL TRUE.
BUT WE ARE SEEING CONDITION IS A
HUGE FACTOR.
KIND OF A SHINY PENNY THAT
SELLS.
SO THAT'S REALLY IMPORTANT.
I THINK MILLENNIALS FOR A LOT OF
REASONS, I MEAN, ONE THING THE
STUDENT LOANS.
THEY DONNY HAVE THE DEEP POCKETS
THAT BOOMERS HAD BACK IN THE
DAY.
SO THEY NEED A HOUSE THAT'S, YOU
KNOW, READY TO GO ALMOST.
AND SO THAT BRINGS PEOPLE BACK.
IF SELLERS CAN, YOU KNOW, THINK
ABOUT A YEAR OR SO BEFORE
THEY'RE GOING TO PUT THEIR HOUSE
ON THE MARKET AND TRY TO PREPARE
IT, YOU KNOW, CALL US IN.
WE CAN GIVE THEM TIPS ON WHAT TO
DO AND WHAT NOT TO DO BECAUSE
IT'S NOT WISE TO SPEND MONEY IN
CRAZY WAYS.
BUT JUST LITTLE THINGS CAN GO A
LONG WAY.
