The Aging of the Real Estate Market

Tom Brezsny
- Tom Brezsny

The Aging of the Real Estate Market

Continuing the conversation… about aging and downsizing and how they are increasingly occupying center stage in the real estate market. Here’s part of the backstory..

Selling or buying a home is rarely just about selling or buying a home! Nobody in their right mind enters the kind of market we have on a lark or a whim. It’s a huge commitment to go through the preparation of selling and who willingly chooses to be a buyer in this crazy, multiple-offer market? Real estate is hard and getting harder.

What’s behind most people’s decision to sell or buy? They’re almost always going through a major life transition. One of the biggies like: getting married, the birth of twins, a new job, getting divorced, empty nesting, retirement, serious health challenges, trying to downsize or of course, the final frontier… death. When people’s lives change in big ways, their homes usually follow suit. 

Homes also play dual roles in our lives. They are the largest assets we’ll ever own (and primary source of future financial comfort). But more than that, they’re also centering places for our lives. They nurture our deepest feelings about privacy, comfort, safety, refuge etc. Home sales touch all our hot buttons around money and loss of control and that’s why they’re such emotional processes. 

Who owns the majority of the existing homes? Older people do. They’re seniors who have occupied their homes for a long time and have huge amounts of equity. And who also face significant disincentives to sell like: waiting for the death of a partner to get a step-up in basis, incurring capital gains liability, potential increases in property tax and the difficulty of finding another place in what is already a low inventory market.

Those homeowners are part of an aging demographic and graying horde of 75 million boomers that’s only about two thirds of the way through their transition into retirement. Their homes constitute a huge shadow inventory of listings that’s queueing up for the market but on hold for the time being until more of them figure “it” out. 

What is “it” exactly?  “It” is the no man’s land between the first two thirds of life and the last and final third. It’s a middle space between wanting to move and being afraid to leave. Where you Intellectually know that change is inevitable at the same time every fiber in your body resists it. It’s a desire to embrace something new but a reticence to give up any part of your routine. There’s no map for this place and for lack of a better term, we call it “downsizing”,

Next Week:  On the Horns of the Downsize Dilemma.

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