Study: Biggest Opportunities in Boomer Market

Study: Biggest Opportunities in Boomer Market Daily Real Estate News | Wednesday, July 01, 2015

Though the real estate industry has made it a mission to bring Millennials into home ownership in recent years, a new study by research firm HouseCanary suggests we not ignore an inconvenient truth: Baby boomers have the buying power.

The study raises questions about how wise it is to focus on Millennial buyers, given their economic limitations. If interest rates - which are expected to keep ticking up this year - were to increase to 6 percent, more than one in three Millennials would no longer be able to afford a home at their current prices, HouseCanary found. Millennials are carrying high debt with limited savings, and their career growth has been slow.

But baby boomers have fueled the housing market for decades as the biggest drivers of growth in the entry-level market in the 1970s and '80s, as well as the move-up market in the '90s and 2000s. Boomers aren't slowing down: They're expected to continue to drive household growth over the next 20 years "due to significant wealth and high home ownership rates," according to HouseCanary. Over the past year alone, baby boomers accounted for 244 percent of household growth annually.

"The vast imbalances in wealth and home ownership among baby boomers and Millennials are resulting in wide disparities in the demand for homebuying versus renting," says HouseCanary President JP Ackerman. "Our analysis indicates that rising interest rates and home prices will exacerbate the situation, as the Millennials' ability to purchase homes will be severely jeopardized as monthly payments get further out of reach."

HouseCanary CEO Jeremy Sicklick says his company's research indicates greater opportunity for developers to target the aging population with for-sale inventory while targeting the younger generation with for-rent inventory.

Source: House Canary<http://www.housecanary.com/infographic-demographic_shift.html>

Housing on Track for Best Year Since 2006

Housing on Track for Best Year Since 2006 Daily Real Estate News | Thursday, June 11, 2015

The residential real estate market, now at its midpoint in 2015, is on track for its best year since the peak of the housing bubble in 2006, notes realtor.com(r) chief economist Jonathan Smoke. But as Smoke is quick to point out, this time it's not a housing bubble.

The buyer rush: Loan Demand Surges on Fear of Rising Rates<http://realtormag.realtor.org/daily-news/2015/06/10/loan-demand-surges-fear-rising-rates>

That's because job growth is fueling the most recent climb in demand for homes. More than 3 million jobs have been created in the past 12 months.

As job growth increases, demand has followed. Homes are selling more quickly. The median age of inventory from homes on the market nationwide in May was 66 days - eight days faster than last year. Some markets are even seeing inventory move in just 18 to 45 days too, realtor.com(r) notes.

"A rapidly declining age of inventory signals that demand is growing more rapidly than supply," Smoke writes in commentary at realtor.com(r). "Indeed, we've had 32 months in a row of existing-home inventory at less than a six months' supply. That's why we're also seeing above-normal price appreciation."

Median home prices rose 9 percent in April year-over-year. Home owners are seeing strong gains in equity lately.

At the real estate's market current level of growth, total home sales this year could near 6 million, which is near the peak seen in 2006, Smoke notes.

Source: "Midyear Report: The Housing Market Is on Track for Its Best Year Since 2006 (and it Ain't a Bubble<http://www.realtor.com/news/housing-market-on-track-for-best-year-since-2006-midyear-report/?iid=rdc_news_hp_carousel_theLatest>)," realtor.com(r) (June 10, 2015)