You hear it everywhere. Baby boomers are starting to retire. The stock market and the real estate market will suffer as the money is withdrawn. This does not seem true in the case of real estate.

Reflections on the future of the real estate market

Baby boomers are those people born during the period from about 1945 to 1964. After World War II, peace and economic prosperity ensued for about twenty years. Along with this came an explosion in birth rates in the United States. This increase in birth rates created an increase in the general population, namely the baby boomer generation.

As economists and pundits look to the future, they worry about what will happen when baby boomers leave the job market. Who will replace them? What about your money? Will the stock market drain from 401k distributions kill the stock market? What about real estate where baby boomers are beginning to spend their peak earning years? Is everything going to crash? No.

The first reason the housing market will not die is the boomers. They don’t just disappear when they retire. Most continue to invest in real estate as they begin to receive retirement distributions. In 2004, this fact was evidenced by the fact that of all home sales, 35 percent were for second homes. Clearly, the boomers will be around for some time.

There is also a new generation that is beginning to enter the real estate market. While it’s true that the baby boomers are the largest population increase we’ve ever seen, keep in mind that the boomers had their own offspring. The second largest population increase that we have seen is these children. They are now entering their twenties and thirties, which means they are entering the real estate market as buyers, often borrowing from their parents for a down payment.

Immigration is a controversial topic. Regardless of your point of view, the indisputable evidence shows a large number of legal immigrants entering the country since the 1970s. Obviously, these individuals and families represent another group of buyers.

Despite the laments of the so-called pundits, the housing market should continue to purr as it always has. Real estate continues to be one of the best investments. Yes, there will be fluctuations, but the doom and gloom prophecies are not backed by the facts.