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United States
Boomers aren't stampeding into second-home market

Mis en ligne le 05/12/2006

There is no greater tendency by baby boomers than the previous generation to indulge in second homes, according to a new study. Boomers might even have troubles selling their second home as the number of potential buyers could fall off sharply, based on demographics.

In research done in conjunction with the Mortgage Bankers Association and the Radian Group credit risk management company, Gary Engelhardt, a Syracuse University economics professor, found that only a small proportion of older Americans have second residences, and And there is actually more movement between suburbs by empty-nesters than into urban playgrounds.
Research shows younger Boomers, and the Generation X group behind them, may be more financially stressed than today's fiftysomethings as they prepare for retirement living. In particular, the growing tendency of employers to stop providing traditional pensions -- with guaranteed monthly payments -- is expected to weigh heavily on future retirees. Expected cuts in Social Security and Medicare could add pressure.
So Engelhardt said people now in their 40s may end up with less ability to treat themselves to second homes than people nearing retirement or already in it.
Engelhardt found that roughly 80 percent of the moves suburbanites made in their 50s were to a home in another suburb. Only 11 percent moved into central cities. Meanwhile, just over 52 percent of city dwellers who moved went out to the suburbs.
This is not very good news for real estate developers putting up condo projects, or individuals buying condos in anticipation of substantial capital gains.
Engelhardt said people typically buy second homes in their 40s and 50s, and most sell the homes within 15 years. About 45 percent sell them within six years, which perhaps isn't surprising given how little people tend to use them. Half of older second-home owners use them two weeks or less a year, while 66 percent use them for four weeks or less, Engelhardt said.
For Boomers, that buying and selling cycle could have disappointing consequences, he said.
The generation behind the Baby Boomers is far smaller -- about 44 million people. So while older Boomers might have no problem selling second homes to younger Boomers, the number of potential buyers could then fall off sharply, based on demographics.

(South Florida Sun-Sentinel, 11/13/06, "Boomers aren't stampeding into second-home market")

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