Baby Boomers Bullish on Real Estate, Home Equity

We might as well rename the baby boomer generation the real estate boomer generation, writes syndicated columnist Kenneth Harney.

A comprehensive new demographic study reveals that the 78 million Americans born between 1946 and 1964 have a passion for owning homes unlike any in the nation’s history. Consider these findings:

• A stunning 96 percent of all baby boomers believe buying a home is a wise financial investment, and nearly 80 percent of them now own homes. One in four boomers owns other forms of real estate besides a primary home — including a vacation home, land or an income-earning property.

• The value of boomers’ primary homes varies sharply by geographic region. Overall, the median market value of their homes nationwide is $181,700. In the Midwest, the median is $143,400, in the South it’s $147,800, the Northeast $215,000, and in the West $359,100.

• Home equity plays a huge role in boomers’ financial planning and well-being. Their median home equity — the market value of a property minus home mortgage debt — is $100,000. The median household net worth of boomers — financial holdings plus real estate, minus all debt obligations — was $149,500 in early 2006.

• However, 23 percent of boomers ages 50-60 control equity stakes of $250,000-$1 million. Or even more. Meanwhile, 15 percent of boomers ages 42-49 have accumulated home equities of $250,000-$1 million. That’s a lot of available capital to withdraw in the form of home equity loans, which is why we have seen those increase so dramatically in recent years.

• Home equity represents a significant percentage of total household net worth for most boomers. An impressive 36 percent of homeowners 50-60 years old report the equity in their primary residences totals anywhere from 51-100 percent of their household net worth. Thirty-eight percent of boomers between 42-49 report the same.

The new study, conducted by Harris Interactive between March 31 and April 6, polled a statistically representative sample of 1,969 baby boomers. The poll was sponsored by the National Association of Realtors and has a margin of error of plus or minus 2 percentage points.

Boomers not only believe strongly in accumulating real estate, they intend to keep doing so even as they head toward the traditional retirement years. An extraordinary one out of four boomers between 50 and 60 consider it very likely or somewhat likely that they will purchase some form of real estate in the next 12 months.

Boomers may be record-breaking acquirers of real estate, but growing numbers of them think it is getting too expensive. Sixty-seven percent of those 50-60 and 75 percent of those 42-49 worry that housing costs may spiral out of control in future years, making affordable housing in an extended retirement increasingly tough.