Baby boomers could boost the housing marketDate posted: 8/14/15 07:45:00 AM
The weight of the housing market is being lifted - albeit, only slightly - from the shoulders of millennials.
While real estate experts have placed an emphasis on luring the millennial demographic into the homebuying scene, there is growing expectation that baby boomers will make an impact in the coming years, according to a recent survey.
The California Association of Realtors reported California baby boomers (born between 1946 and 1964) could make a major dent in the state's housing market over the next few years.
The association found 46 percent of California baby boomers who are renting but previously owned a home had to sell because of financial reasons. But a large number of baby boomers hope to own a home once again.
Chris Kutzkey, president of CAR, said some baby boomers are finding financial stability after suffering through the downturn of the economy.
"Baby boomers are in their peak earning years and will continue to wield great influence on the housing market," Kutzkey said in a release. "Even those who went through financial difficulties during the economic crisis recognize the benefits of homeownership and would rather buy another home than rent."
Some baby boomers are closer to ownership than others
Baby boomers who previously owned a home but are now renting seem to be in a better financial position to buy another home compared to boomers who never owned a residential property.
Baby boomers who owned a home at one point had an average household income of $78,570. That's nearly twice as much as baby boomers who are renting and have never owned a home. Thus, baby boomer renters who previously owned a home are nearly twice as likely to make a residential property purchase as those who have only rented.
Baby boomers vs. millennials
Despite the projected increase in baby boomer renters who will make a purchase in the coming years, one housing market observer still believes millennials are the most important demographic.
"The millennial generation is the key to a sustained real estate recovery, and boomers who are downsizing are helping open the door for many first-time homebuyers while also driving demand for purchases and rentals in the markets where they are moving," RealtyTrac Vice President Daren Blomquist said. "Naturally, millennials are attracted to markets with good job prospects and low unemployment but that tend to have high rental rates and high home price appreciation, while boomers are moving to lower populated areas which have slower home price appreciation."
Blomquist went on to say millennials are lured to markets with low unemployment rates and strong job markets. However, metro areas with solid employment rates tend to have high rental rates and faster home appreciation levels, which hurts millennials when it comes to saving money.
RealtyTrac reported the 10 counties across the nation with the biggest increase in millennials have an average unemployment rate of 5.2 percent. That is much better than the national average, which hovers around six percent.
RealtyTrac said millennials are leaving less populated metro areas for markets dense in population. The real estate firm said the District of Columbia; Denver; New York; and Portland, Oregon, were a few premier destinations for millennials.
Markets where millennials are leaving in mass included Monroe, Michigan; East Stroudsburg, Pennsylvania; Atlanta; Homosassa Springs, Florida; and Prescott, Arizona.
Baby boomers are doing just the opposite, choosing to get out of populated areas for less crowded cities.
The top markets where baby boomers are moving included Wilmington, North Carolina; Phoenix; Punta Gorda, Florida; Hilton Head Island, South Carolina; and Seaford, Delaware, according to RealtyTrac.
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