In the midst of the worst national housing market in sixteen years, a milestone was crossed on Monday, October 15th, which may or may not bode well for the future of real estate in the United States. Sixty one year old Kathleen Casey-Kirschling, a former elementary school teacher and Red Cross worker applied for Social Security benefits via an on-line event hosted by Social Security Commissioner Michael Astrue. Casey-Kirschling, born one second after midnight on Jan. 1st, 1946, thus earning her the notoriety as this country’s first baby boomer, will become eligible for benefits when she turns sixty two next year. Some may say this signals the demise of Social Security as we know it today. Certainly, reports of its pending bankruptcy have been circulating for years and it remains a staple of congressional and political campaign debate.
On the other hand, it also likely marks the beginning of something truly phenomenal, the greatest transition of personal wealth from one generation to the next in human history. Approximately ten thousand baby boomers will be applying for their Social Security benefits daily, members of a generation ninety million strong, many of whom are home owners. It stands to reason, then, this generational economic behemoth is going to be on the move, downsizing, converting vacation second homes into primary residences, relocating from rural to urban centers, passing their estates onto heirs, etc. Baby boomers span the social and cultural divide of a two millennia, bridging the industrial and technology ages. They are neither rooted in the security of the silent generation, nor devoid of the techno-savvy celebrated by generations x and y. Baby boomers lived and struggled through the post-Vietnam era disintegration of such social givens as long term job security. Adaptable and tenacious, they invested in real estate, pursuing that holy grail of the American dream and in which they retain much of their personal liquidity today.
On a trip to Los Angeles this weekend, I was reminded of the sheer scope of baby boomer property holdings. Driving down Sunset Boulevard from West Hollywood to Pacific Coast Highway, roughly ten miles, we were flanked by multi-million dollar plus communities the entire trip, through Beverly Hills into Brentwood, Pacific Palisades and finally the coast. What we saw was but a fraction of the properties sequestered behind gates and along palm-tree lined avenues. While L.A. may boast an inordinate number of well heeled boomers, these enclaves exist across the nation.
No question real estate as an industry and commodity is changing. Some housing markets are enduring fifty percent depreciation in real estate values. However, for anyone who has made a long term investment, no matter how deep the valley, there is always a peak. Interest rates remain manageable and populations continue to be on the move. For baby boomers, fifty percent depreciation in today’s market represents a significant appreciation in their property’s value assuming they made their investment a decade or more ago. Bleak as it may seem or feel to some, a combination of baby boomer migration and an ever-increasing population will only lead to continued long term growth in the housing market.
As Donald Trump mentioned on CNN’s Larry King Live last night, this is a terrific time to be investing in real estate.