A recent survey of California baby boomers, those born between 1946 and 1964, shows that they will continue to be a strong force supporting our real estate market.
As the wealthiest generation, these baby boomers “will continue to wield great influence on the housing market,” says the President of the California Association of Realtors. “Even those who went through financial difficulties during the economic crisis recognize the benefits of home ownership and would rather buy another home than rent.”
The survey found that 22 percent stated they expect to buy a home in the next five years. Of those baby boomers surveyed, 78 percent indicated they will not sell because they like their current home. Nearly all baby boomer home owners (92 percent) surveyed have equity in their homes.
Despite the recent economic recession, only one in four baby boomers are postponing retirement. On average they plan to retire in nine years.
Three in 10 baby boomers live with their children. The majority of these baby boomers live with adult children mainly due to their children’s financial troubles. Baby boomers pay for a majority of living expenses with their children only contributing a median of $32 per month for living expenses.
Approximately 8.6 million baby boomers currently reside in California, according to the U.S. Census Bureau.
The median sales price for the six county region comprising Southern California showed annual gains of 5.1 percent at the 2014 year end according to Corelogic, a leading real estate information service. The median price paid for all new and resale houses and condos was $415,000.
The Southern California median sale price at the end of last year was lower, by about 18 percent, than the peak median price of $505,000 reached in the spring/summer of 2007. Recently, foreclosure resales have hit their lowest numbers since early 2007.
For the current real estate cycle, the foreclosure resales reached a peak of almost 57 percent in February 2009 when the recession hit the Southern California real estate market hard. At the end of last year, foreclosure resales represented only 5 percent of the resale market.
The median sales price reported for Century City, comprised primarily of condos and townhomes, is about $862,000 for the most recent quarter. Trulia reports that for the most recent quarter, the average listing price per square foot for homes in Century City was $527.
Sales prices have appreciated about 38 percent in Century City over the last 5 years.
Zillow is predicting price gains for Los Angeles will continue but at a much slower pace with an expectation of a rise of 1.8 percent for 2015.
Central bank policy makers have not ruled out a rate hike this year. For guidance regarding sources for mortgage rates and mortgage professionals, please feel free to contact me.