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.

Next generation buyers: Young and savvy

The young is not so carefree after all.

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A survey noted that working a second job and moving in with the parents are some of the ways that Generations X and Y are willing to do to save for a home. Results of the study conducted by Better Homes and Gardens Real Estate among 18 to 35 year old Americans revealed that the respondents have become increasingly knowledgeable about homeownership due to the increased media coverage brought about by the housing crisis. The survey also noted that the young is not deterred from buying a home and believes that owning one is a key indicator of success. Furthermore, these future homeowners are willing to do their research and save in ways that may surprise those who believe the values of Gen X and Y have strayed from those of their elders.

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As it turns out, the Millennial Generation is not only optimistic about their employment opportunities, they are also knowledgeable, responsible, and savvy when it comes to real estate—characteristics that any property buyer or seller should embrace.

Every generation faces some economic hardships that define the way they see their financial future. The baby boomers faced an oil shortage crisis back in the 1970s. For Gen X and Y, it was the collapse of the housing sector more than five years ago. And the crisis led the Millennial Generation to believe that it takes a lot of planning and research to make a reliable home purchase.

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Visit this website for more real estate investment tips from seasoned investor Peter Vekselman.