Generation Jones wonders - what's going to happen to residential real estate and rents?

I’m Generation Jones, born 1961. I have watched over and over and over in my life as the demographic pig-in-the-python Early Boomers caused huge, sweeping changes in society due to their sheer numbers, but then after they were through, people of my age and younger (GenX) caught the blow-back.

They had to build schools for Early Boomers, but Jones and GenX experienced shrinking classrooms and closing schools. Early Boomers caught the best jobs (with pensions in many cases) as they started working during the go-go “Nifty Fifty” boom years of the mid-late 1960s, but I was coming of age and into the job market during the Carter “malaise” years. Pension? What’s that?

And so we reach in 2024 the “Peak 65” era… 11,000 people turning 65 in 2024, it will peak out at this run rate. At 65, if you’ve done it right, you’re at peak wealth, probably your health is still OK. So why not bid against your children for that piece of residential real estate? You can pay cash using the proceeds of the sale of your existing home - they have to get a 7% mortgage, and they came into the job market, well, right after the Great Financial Crisis, so they are short on cash and heavy-laden with student loans. Guess whose going to win that contest? We’ve also gone through all that post-GFC zero interest rate policy money-printing nonsense, and the COVID work from home and the need to get out of the city and buy that place (or that second place or third place) out on the country nonsense, the building & appliances supply chain nonsense, and the investors buying up every dwelling they could find nonsense.

So of course it seems that residential real estate (RRE) will never go down. It seems to have reached a “permanently high plateau”. We are literally in housing bubble 2.0 again right now… the affordability ratios right now (average house price divided by average family income) are as bad as they were in 2005. But like I said, I’ve seen this movie before - the changes that Early Boomer force always have blow-back. So what will be the blow-back this time?

If Early Boomers are competing against their kids for RRE in the early 2020s, and we’re at Peak 65 in 2024, then what happens in 15 years when Peak 65 turns into Peak 80? In 15 years, people born in 1946 will be turning 93, which means in the aggregate they’re dead. What happens when all of the Early Boomer properties start coming back onto the market? I stink at predictions, but I just have to ask - how can RRE stay elevated given those conditions?

I’m not in the housing market now, nor will I be soon, but I am just wondering what I might be facing if I want to sell my house and relocate to my more ideal retirement locale. I would not feel comfortable making the trade today - I’d probably feel OK on the sell side, but maybe not on the buy side. I’d rather have a more “normal” undistorted market, where supply and demand are in better balance.

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One strategy is to always buy new houses. I have never purchased a house over five years old and only one over one year old. I have never lost money on a house I personally owned, (I used to be a RE broker,) and in owning eight personal-resident homes over the last 60 years I have gained well over $1M.

Houses start to deteriorate the day construction is completed and they don’t last forever.

All other things being equal, it’s better to own a younger house.

I agree. We’re having lots of plumbing / electrical issues trying to sell my Mom’s house (circa 1954). My newer house which I built in 1992 has been a nice place to live.

Never heard of Generation Jones, but if you were born in '61, you’re a baby boomer.

A bit younger than me, but I was early in the workforce during Carter years, I have pensions, and the interest rate for my first home was 10.5ish%. Last time we refinanced our home it was down to 6.5%. Paid off quite awhile back.

Rates come and go. Blaming other people for making the choices that are best for them is rather entitled. It’s not like they’ve stolen from you.

I’m not blaming anyone. It is what it is. No one can choose when they are born. What I’ve mentioned are well-documented facts about the experiences of early and late (Jones) boomers, which are quite different. The demographers several years ago realized the generation had to be split in two because of the marked differences in life experiences:

“Generation Jones is noted for coming of age after a huge swath of their older brothers and sisters in the earlier portion of the Baby Boomer population had; thus, many note that there was a paucity of resources and privileges available to them that were seemingly abundant to older Boomers. Therefore, there is a certain level of bitterness and “jonesing” for the level of doting and affluence granted to older Boomers but denied to them.”

I’m in the “leading edge baby boomer” era. We probably had the best opportunities of the baby boomers.

Being in your twenties in the 1960s brought with it a lot of opportunities to get ahead. Technology was just coming into it’s own with the sudden expansion of communications, TV, jet travel, computers, space industries and more free time and money to spend for many people.

It must have been fun!

It would be interesting to look at the aspects of a particular slice of time and how the different social, financial and political conditions that were present helped form the attitudes of people in their formative years. In the 1950s, during my years as a teenager, I remember things as upbeat and positive.

It may be the case that those conditions which influenced a person’s attitudes about risk and reward during their formative years play an important part in their actions as young adults. I think the 1960s presented many opportunities, but I also think the 1950s helped form my attitude and prepared me to act when I saw an opportunity.

That said, being in a place to observe what success looks like, has a huge impact on how life goes for you. If you are born into a circumstance that doesn’t allow you to see how and what successful people are doing, it’s tough to dig yourself out.

I was in aircraft A&E school in that period when piston a/c were being replaced with jets. The airline’s mechanics were all piston trained, and a few schools [like mine] had some jet engine training.

We had reps from United, Air West, Pan Am, and TWA come to entice students with a career. Many were hired on the spot, even with months to go before graduation, or even passing the federal A&E exams.

I owe my success to living in that period, and became a technical instructor at 25. This enabled me to receive extensive training at Boeing, Lockheed, GE, General Dynamics, Pratt & Whitney, Rolls Royce, Air-research, and many others.

I was simply in the right place at the right time.