Babyboomer Bonanza! / Empty Nester Ecstacy!
We are in the midst of an extreme market. Today's catch-up economy has emerged from the global COVID Recession and triggered much larger demand - fueled by lots of cheap cash. Residential real estate is just one of the industries that has been positively affected; restaurants are booming; tech is on fire; medicine is strong; Amazon and Peloton have done amazingly well.
In all markets lie opportunity, and one of the greatest opportunities is the hands of down-sizing suburban BabyBoomer-EmptyNesters. Current market conditions present a perfect confluence of events for these lucky aging adults. Here's why:
own homes much larger than their current needs.
bought their homes years ago and their mortgages may have already been paid down significantly or completely.
are adjusting or shifting their careers, either working less, retiring or changing professions.
who lived in the suburbs or in high-tax areas saw some significant devaluation prior to 2020. This has turned around dramatically over the past 15 months.
were more prone to COVID risk and did not want to sell in 2020, fearful of exposing their homes and themselves to the virus. Some felt selling during a pandemic would deliver less than optimum results. This perception and reality have changed in our post-vaccine world.
hold a big chunk of their assets and retirement savings in their homes. Diversifying and liquifying now may make sense.
have the potential for large capital gains on homes they've owned for a long time. If (and when!) these rates change, they may net less for retirement.
homes that have been owned for a long time may have deferred maintenance needs requiring renovation and repairs. Real estate taxes, HOA fees, insurance costs and the like tend to be high.
may be compelled to sell. There may be physical changes that make navigating stairs a challenge, for example. Or they may want to be closer to health-related amenities and services, or to their grown children and grandchildren. It is wise to anticipate these needs early and proactively, and move before moving becomes even more of a physical challenge.
are simply ready for a 'next chapter'. Being mentally stimulated and making changes is a key to healthy longevity.
who move into more urban areas may be able to take advantage of COVID urban discounts before they disappear. Even in urban areas that haven't experienced price drops, it is safe to generalize that urban prices haven't appreciated nearly as sharply as suburban prices.
Demand for suburban homes is currently through the roof. But no market where over-bidding and multiple bidding is rampant lasts forever. Super-low interest rates don't last forever either, especially in inflationary times. Office workers may not be able to work remotely forever. Now is the time to leverage the suburban home price spikes by downsizing. Let's assume , for example, that the market is up 20%...... the $3 million home in 2019 is worth $3.6 million today. Conversely, the smaller $1 million replacement home is worth $1.2 million today. The net gain is obvious. The DREAM Down-Sizer Market, the BabyBoomer Real Estate Bonanza and the Empty Nester Ecstasy, is today's real estate market reality. Carpe diem! Take advantage!