Anecdotes Counter To Own Analysis – “The strongest argument I have against this is the boomers I know personally, none of whom have been stupid with their money, none of whom got LOCs to support unsustainable lifestyles.”

Vulture Fun at vancouvercondo.info January 7th, 2011 at 5:11 pm
“[Boomers] getting old. We hear about them often on the news, but how big an effect will they really have on real estate? I tend to think demographics will be the biggest factor in the coming crash. I know this is nothing new, but can anyone dispute the common theory on how this all plays out:
1. The oldest boomers are just turning 65. Time to bail on the house (which is too big since the kids left) and buy a condo or rent.
2. 40% of them are sailing into retirement with nothing saved. The only source of funds other than meager government programs? The primary residence. Time to sell.
3. The first ones out are winners. The last ones out get killed. Once this group starts to sell it creates a vicious cycle that drives prices down for the next ten years. Of course, not all boomers will be forced to sell, but there’ll be enough that do to have a huge effect.

The strongest argument I have against this is the boomers I know personally, none of whom have been stupid with their money, none of whom got LOCs to support unsustainable lifestyles.”

5 responses to “Anecdotes Counter To Own Analysis – “The strongest argument I have against this is the boomers I know personally, none of whom have been stupid with their money, none of whom got LOCs to support unsustainable lifestyles.”

  1. How do you know what they are borrowing? Heck, I know few details about even my own parents finances. I’m sure they’re doing well, but they don’t consider it proper to share details with everyone.

    You might be suprised at how many people are swimming naked.

  2. Even if they are “financially stable” they could still add to the market if the equity they have in the house is part of their retirement plan.

    Meaning: If they see people starting to sell they may decide to get “out of the market” ASAP as well adding to the downward pressure.

    Nobody who thinks they have a few hundred grand sitting in one asset will just see it lose value because they’re “off well enough”.

    The sell off will be as much practical (meaning: The seller needs the money) as psychological (meaning: The seller wants to materialize imaginary gains).

  3. Well, I have written on this topic before…but currently, my aunt and uncle have sold the family home that was too large once the kids left. They just retired and my uncle has a decent pension. The money from their home will be used as a downpayment for their children’s homes…because we all know that kids now a day could only buy in with help from their parents…ironic that our parents saw to that, eh?
    My parents will not be selling, but my adult siblings are still living with them so they have no reason to sell. From my experiences, most of the boomers that I know got large inheritances from their parents…I have a feeling this was a common place occurance. In 2000, while in a RBC branch I saw a pamphlet titled “how to invest your inheritance”…anyways…of all the people I know who have inherited large sums of money, most have spent it already on lots of new toys…some bought houses…the point is that I have a sneaking suspicion that most of our economy in the lower mainland has been driven by three factors only for the last twenty years…1)illegal gains, 2)funds from offshore, 3)inheritances…once #3 has been spent it will wipe out 1/3 of our economy…

    Any thoughts?

    • “the point is that I have a sneaking suspicion that most of our economy in the lower mainland has been driven by three factors”

      Driven by debt, methinks. Met someone who has combined income about $180K, just bought $1.1MM house with 25% down. This is absolute irrefutable proof that not everyone buying million dollar properties is Asian with limitless offshore income and savings.

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