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.