The Boomers and Recession

From Iconoculture, a lifestyles and culture tracking news feed that I receive, come this story about the Great Recession meeting the American work ethic. Only one in three Americans believe they'll ever be able to retire fully, according to a January 2009 survey by Scottrade (BusinessWire 2.25.09).

That belief is driven entirely by fears about the economy, low personal savings, and the terrible decline in IRA and 401(k) portfolios that has occurred since September 2008. Not only have those accounts deflated, but because of near-term financial pressures, Americans are less likely to be making any contributions.

Who's the most pessimistic about retiring? Boomers lead the nervous Nellies, with 67%concerned about having enough money to retire. Gen Xers are right behind: 64% are stressing about saving for their twilight years. Millennials are remarkably optimistic — but then they have all the time in the world, right?

Boomers have been hit hardest by the Great Recession — not because they're losing their jobs (they're actually doing OK in that respect) but because they're losing their nest eggs.
Americans love to work. And now, thanks to the economy, they feel they'll have to work. What about social security? They're not counting on it.

What does this mean for us as Realtors? I am already starting to see articles that now forecast the expected flood of Baby Boomer retirees into t he downsizing real estate market may be more like a trickle. Why? Maybe because the Boomers have lost most of their equity in the McMansions that they now own.

A big part of the problem that I hit with the older Boomers (maybe really into what is sometimes called the Matures) is that many have owned their homes since the 70’s and 80’s and they believed all of the press that they read about how their homes had appreciated. The houses that they bought originally for $80-120K (back when that was big money) had supposedly appreciated up into the mid $300K’s (some even higher) by the early 2000’s. They felt really good about being able to cash out on that investment as a part of their retirement.

Now I come along and have to tell them that their homes are only worth the low $200K’s maybe less and they are furious. Further, I have to advise many that they have lowered the values themselves by not investing in updating the house over time. Shoot the messenger is the common reaction. For me anyway; in this area, older, long-time owners are proving to be some of the most difficult to deal with, in terms of getting listing pricing right. What about you and your area?