REAL ESTATE
THE REAL ESTATE GENERATION GAP
With baby boomers soon ready to retire and the state's population growth stagnating, who will be around to buy our houses when we're finally ready to sell? Experts predict a dangerous glut in real estate inventory is possible - but there is some hope.
Bill McInerney had a million-dollar
house, and he hated it. The 1½-acre lot
that constantly needed raking and mowing
and shoveling, the multiple bedrooms and
big kitchen that were too much for one
person, the half-hour commute from
Dedham to downtown Boston – none of it
suited him. He didn’t even like the
quiet. “I’m a city boy,” he says. “I
want to hear cars and fire trucks and
ambulances.” So a little more than a
year ago, approaching his 60s and
rattling around the halls alone, he
started thinking small. McInerney found
a one-bedroom apartment in Brookline
under the shadow of the Citgo sign, a
“lower end” place in the high $300,000s
that he nonetheless loved for its
location, with “13 restaurants and the
streetcar right across the street.” He
sold his white elephant in Dedham to a
family of seven for a little under a
million, “just as the real estate market
started to go down the tubes.” He never
wants to live in a big house again, he
says, and he doesn’t miss his old one
either.
He may be lucky he sold when he did. The 57-year-old is at the older end of the baby boom generation, which is now between 42 and 61. Most boomers will partially or fully retire in the next two decades, and as their lifestyle slows down, so will their desire for the huge houses the wealthier of them have been snapping up in the past few years. Many will have the same idea as McInerney – to unload those houses – which means the number of McMansions for sale is about to get super-sized.
But who’s going to buy? Generation X, a.k.a. the baby bust, is largely uninterested in sprawling suburban homes. And there aren’t nearly as many Xers as there are boomers. There just won’t be enough potential buyers unless the Xers and the older members of Generation Y are joined by a flood of new immigrants who both want the boomers’ houses and are able to pay for them. If that doesn’t happen, prices at the high end will sink.
This is “a godsend” for those in that small group of future buyers, says Harvard University economist Ed Glaeser. Across the country, they’ll be able to snatch up big houses for relative steals compared with what they’d pay today. But boomers who are counting on cashing in their real estate to fund their retirement may be in trouble, because their houses almost certainly won’t fetch their current prices. And those in the Northeast may be in for a double whammy: Compared with the rest of the country, the region has both more boomers looking to move out and fewer new immigrants who might take their places. The baby boom gave Boston, and the rest of the country, its real estate boom. Is the baby bust about to give us the real estate bust?
He may be lucky he sold when he did. The 57-year-old is at the older end of the baby boom generation, which is now between 42 and 61. Most boomers will partially or fully retire in the next two decades, and as their lifestyle slows down, so will their desire for the huge houses the wealthier of them have been snapping up in the past few years. Many will have the same idea as McInerney – to unload those houses – which means the number of McMansions for sale is about to get super-sized.
But who’s going to buy? Generation X, a.k.a. the baby bust, is largely uninterested in sprawling suburban homes. And there aren’t nearly as many Xers as there are boomers. There just won’t be enough potential buyers unless the Xers and the older members of Generation Y are joined by a flood of new immigrants who both want the boomers’ houses and are able to pay for them. If that doesn’t happen, prices at the high end will sink.
This is “a godsend” for those in that small group of future buyers, says Harvard University economist Ed Glaeser. Across the country, they’ll be able to snatch up big houses for relative steals compared with what they’d pay today. But boomers who are counting on cashing in their real estate to fund their retirement may be in trouble, because their houses almost certainly won’t fetch their current prices. And those in the Northeast may be in for a double whammy: Compared with the rest of the country, the region has both more boomers looking to move out and fewer new immigrants who might take their places. The baby boom gave Boston, and the rest of the country, its real estate boom. Is the baby bust about to give us the real estate bust?