The Baby Boomer Effect on Home Equity

By Jonathan Haeber
CMR Columnist

In an earlier column, I spoke about the baby boomer effect on condominium prices. This time around, we'll review some statistics on how baby boomers will affect home equity across the board. As you will see, the statistics are surprising.

An astonishing 1 out of 4 baby boomers consider it "very likely" or "somewhat likely" that they will purchase a home within the next 12 months. Especially considering the current home mortgage and real estate market, this is good news.

Combined with the news in October of 2006 that the country's 3rd Quarter GDP grew at a low 1.6%, many analysts portend that real estate market will deflate. The Fed may even lower rates because of the slowing economy, and people could begin buying real estate again within the next year because of the lower rates. This is especially true of baby boomers.

The Advantage of Home Equity

Unlike other buyers, boomers have the advantage of home equity. The net worth of the average boomer is $149,000 -- 100k of which is home equity. Unlike most other buyers, boomers can buy in a recession. They simply use their equity to leverage their new mortgage with a higher down payment. Combine that with the lower interest rates, and lower prices in a recession and they provide the perfect safety net for a faltering housing market.

Though these are only predictions, 2 out of 5 baby boomers expect to own more real estate soon. If you take into account that the baby boomer population represents over 75,000,000 people, then 30 million boomers should be looking into real estate in the coming years!

Source
Baby Boomers Have a Real Passion for Real Estate

About the Author
Jonathan Haeber is a marketing writer for Discovery Channel Stores. He recently purchased his first home, and took a self-taught crash course in home mortgages.

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