Baby boomers will soon want to downsize and move into a cushy retirement, but according to Emily Badger at The Atlantic, their War on the Young may put a crimp in their plans:
“[Boomers] will want to sell their homes, and they’re hoping there are people behind them to buy their homes,” says Nelson, director of the Metropolitan Research Center at the University of Utah. He expects that in growing metros like Atlanta and Dallas, those buyers will be waiting. But elsewhere, in shrinking and stagnant cities across the country, the story will be quite different. Nelson calls what’s coming the “great senior sell-off.” It’ll start sometime later this decade. And he predicts that it could cause our next real housing crisis.
That young people today are hesitant to lock themselves into a mortgage comes as little surprise. Average incomes for the 25–34 demographic have dropped by 8 percent since 2007. But even once the effects of the recession subside, America’s young will still face soaring student debt (now totaling nearly $1 trillion nationally), a horrible job market, and the crippling cost of funding Social Security and Medicare at their current levels. All of these factors have helped to create a new rental generation of people delaying purchases of homes, cars, and even marriages and families.By 2030, Badger predicts, there will be half a million more housing units for sale than there are households entering the market. Indeed the trend has already started: the rental industry is booming. According to the WSJ, “In January, investment bank Keefe, Bruyette & Woods estimated that institutional investors had raised between $6 billion and $9 billion to buy U.S. houses and convert them into rentals.” The American housing rental industry is so good in fact, that foreign investors are flocking to the scene. Even the car rental industry is benefiting. Enterprise and Hertz are reportedly expanding into an estimated $1.8 billion hourly car-rental business (like Zipcar).The boomers’ failures have come around full circle.