The Wall Street Journal (WSJ) had an article this week that hit too close to home for me not to add my two cents. The title almost says it all with the following, “Congrats, Your House Made You Rich. Now Sell It.” At the article’s core is the assertion that many of the nation’s homes are owned by the baby boomer generation that began buying in the 1970s. Fueled by large communal expansion and cheaper prices, boomers didn’t stop with their initial purchase. They expanded old homes, upgraded to new homes and even bought second homes. Now many of these owners are sitting on a large percentage of the nation’s housing stock with either no mortgage or a mortgage with a much lower interest rate than what is currently available.
No surprises here. We have discussed more or less this exact scenario many times on these pages. The part that raised my eyebrows came towards the end. The article explores the notion that at some point these homes will start hitting the market. We don’t need to state the obvious. Let’s just take it as a given that, yes, at some point the boomer generation’s homes will hit the market and then what will happen when they do?
As of right now, and by that I mean the last couple of weeks, I have witnessed first hand a buying frenzy when a rare boomer home comes to market, bringing out a surge of serious buyers. These sellers are taking the advice of the WSJ article title, and yes, what an advantage they have. They are making lots of money on their homes, gains that a few years ago would have been hundreds of thousands less. The article explored the ramifications of a change in supply and demand as an increasing number of boomer homes eventually come to market. When that happens, there is a strong case to be made that the buyers will gain the upper hand and prices of homes will come down. If you want to get rich, the article concludes, sell while you can!
I raised my eyebrows as part of me knows this is true, yet there is another part of me that has not seen this prediction confirmed. Much of the data pointing to a possible inflection point is based on boomers having fewer children than their parents’ generation. I do not have access to any official data but something tells me that unlike the national birth rate which has been decreasing with each successive generation, some of the Northern New Jersey communities show the inverse. In other words, while more boomer houses will come to market, inventory will be offset by the increasing buyer demand. This simply confirms that the housing supply and demand game will continue to favor the current sellers.
Since my crystal ball is currently out for repairs, I can’t say which trend looks more likely to occur. One conclusion, however, can certainly be formed. Our towns must find creative ways to help current owners, who wish to downsize, find housing within the neighborhoods they have been a part of for so long. I am not a town planner but I surely understand the need for more multi family, two family and condo/coop options in order to best sustain the growth of our communities. If you have any ideas please share them with me as I would love to hear from you.
Nechama Polak is the broker of record and owner of V&N Group LLC, located at 1401 Palisade Avenue in Teaneck. Send your thoughts and comments to [email protected] or call 201 826 8809.
