REPOST: Baby boomers and real estate investing in this decade

According to this Huffington Post article by Be a Real Estate Millionaire author Dean Graziosi, baby boomers' decisions may have a big influence on the real estate market over the next decade. 

The 2000 Census gives us an estimate of 78+ million Baby Boomers, people born between 1946 and 1964, in the U.S. This group of people is entering their retirement years now and over the next decade. They're also the richest age group, both in real estate held and savings and investment accounts. Their lifestyle decisions going into retirement will influence the economy in a number of ways, and real estate will be right at the top of the list.

One thing we have in this country is a large group of "economists," and "market analysts." What's interesting about this group of real estate market-watchers is that there are two very different ways in which they predict Boomers will influence housing markets over the next decade. Let's take a look at those two opposites and see how each can change the way real estate investors approach their markets.

The "Golden Handcuffs" Scarcity Theory

This prediction of how the markets will be influenced by Boomers assumes that the overall real estate market will continue to improve and be boosted by a scarcity of supply for a number of years. Boomers in many areas are sitting on real estate worth a fortune, but they don't have a lot of cash; the "golden handcuffs" of real estate riches they can't afford to sell. If they sit on their homes, inventories available for buyers will be reduced and home prices will improve with this scarcity of supply.

The golden handcuffs will cause more of these owners to stay put; many may seek out second mortgages or reverse mortgages to improve their retirement with cash locked up in their homes. Many of these golden handcuff owners are in areas with very high-priced real estate like California, New York, and other areas in high demand. Others are all around the country in high-dollar real estate neighborhoods. There will be fewer homes available, higher prices will result, and markets will be happy.

What's the outlook for investors in these areas, particularly rental property investors? With few homes for sale and high prices, there will be an increased demand for rental homes. Unfortunately, there will be few for sale that will be suitable for cash flow investing. However, the sharp investor who wants to invest in these markets will look to the edges. Rents will be high, something we like. The tenants will be forced to move outward from the center and they'll pay higher rents the closer they can locate.

To read the about Dean Graziosi's The Dump-and-Move Theory, as well as the rest of the article, click here.

Peter Vekselman is a real estate coach who has helped his clients close countless deals over the course of his career. Follow this Facebook page for updates on the real estate market.