Some economists, like the University of Utah's Arthur Nelson, are exploring the idea that, within the next 20 years, a slow-building avalanche of home sales by retiring baby boomers could trigger a wider problem in the housing market. The fear is that, as older Americans downsize to more manageable homes, there won't be any demand to purchase these properties. With no one to buy them, these houses could turn into a big problem for the investors that own them.
According to The Atlantic, which covered Nelson's research in a March 5 piece, a large portion – roughly 77 percent – of the homes sold between 1990 and 2010 were to those who are part of the baby boomer generation. Nelson argues that a "great senior sell-off" is approaching, as more folks enter retirement communities and assisted living centers. This fact, coupled but a gradual decrease in the incomes of younger Americans, could trigger problems for the housing market.
"Ok, if there's 1.5 to 2 million homes coming on the market every year at the end of this decade from senior households selling off, who's behind them to buy? My guess is not enough," Nelson told the source
Another part of the issue, Nelson said, is that preferences in housing are changing with the new generation. Younger families are opting for smaller homes or rental properties, leaving the bigger residences with fewer potential buyers.
Investors with financial interests in the real estate industry might want to re-evaluate their holdings to reflect this potential new environment. For example, shifting to rental-based cash flow real estate would help take advantage of the shifting demand in the market. To learn more, visit GreatWealthStrategies.com today and download a "Free Game Plan Report."