Boomers King Of Real Estate Industry
The baby boomer generation has had to adapt to many economical, technological and sociological conditions throughout their lifetime. From trying to understand what exactly hip-hop is to setting up an e-mail account, baby boomers have done a good job fitting in with society.
Perhaps their best adaptation has come in the real estate industry. Most boomers’ parents owned one home (if that) growing up. But even as home prices have quadrupled several times since they were legally able to purchase a property, baby boomers are by far the largest real estate owning demographic with a strong hold on the investment and second home sector.
The article, “Baby Boomers: Greatest Real Estate Generation?” written by columnist Kenneth R. Harney and posted in the October 23, 2006 edition of Realty Times, explains how baby boomers continue to control the real estate industry, crowning themselves king. A new research conducted by Harris Interactive and the National Association of Realtors suggests that baby boomers receive their newest recognized title: the greatest real estate generation ever.
“Like no previous demographic group, the 78 million Americans born between 1946 and 1964 have a seemingly insatiable appetite for real estate. The study, based on a statistically representative sample of 1,969 boomers polled early this spring, was released last week by NAR.”
According to the study, nearly 80 percent of all boomers own homes, with ownership rates exceeding 90 percent in those with mid to high incomes. This is amazing considering that baby boomers consist of only 38 percent of all households and own over 50 percent of all second homes.
“One out of four boomers owns at least one piece of commercial real estate, land, rental property or a vacation home. One third of all boomers who own rental real estate own more than one unit. Among those who own commercial property, 29 percent own multiple investment parcels.”
The high rate of real estate ownership has made many baby boomers wealthy or at least financially comfortable. Boomers’ median household net worth is $149,500 with $100,000 of that attributable to home equity. However 39 percent of boomers have a net worth ranging from $250,000 to $5 million.
Home equity is probably the most representative statistic of real estate worth. Since baby boomers have already owned property for 20 plus years, one would expect them to have a substantial amount of built up home equity.
“Thirty-five percent report primary home equities -- the value of their principal residence minus mortgage debt -- of $150,000 to $1 million or more. Homeowners on the west coast and the Northeastern states generally have a higher net worth than those in the South or Midwest -- primarily because home equities tend to be larger in higher-cost real estate markets.”
The survey concludes that even with all this real estate ownership and control, baby boomers plan to keep buying and investing. “Among those with household incomes of $100,000 and up, 37 percent say it is likely or extremely likely that they will purchase real estate within the next 12 months.”
If baby boomers have adapted to the changing real estate markets, what’s expected from the X generation. Despite all the bellyaching that real estate prices are too high or the market is too slow, economists expect the next generation to stake their claim in the industry as well (many of them already have).