The boomers are set to boom again!
The boomers are set to boom again!
I have been thinking a lot recently about the current situation. There are always winners and losers in a recession. Who do you think will be the winners? I think my friends the baby boomers, will come out on top, yet again!
There are a lot of people out there that love to give the ‘boomers’ (as they have been nicknamed) a tough time. Naysayers like to say they have had it easy. I believe that’s rubbish as they have worked bloody hard to get where they have got to. Mortgage rates, whilst they had families, were north of 15% and they worked hard through tough economic times, saved hard, and now they are where they are. Good on them! As a ‘Generation X’ person, all I can say is, I am a tad envious right now!
So why do I think they will prosper while the rest of us may struggle post COVID-19;
History says that this group in the past have tended to weather the storm very well. Yes, they have ups and downs but they appear to be resilient and there are a number of factors why they will do well again in the property market.
To understand this let’s look at the generations in isolation.
Generation Alpha (Gen Alpha is the first to be born entirely in the 21st century). Born either early 2010’s to 2020’s.
This is where my two boys sit. I think they are possibly a tad young to worry right now about the property market as they are just coming out of nappies! But clever parents out there may be thinking about getting their kids onto the ladder right now if they have the money to do so? Its just too early to forecast what COVID-19 & a downturn in the economy will do to this group. But the next bracket we can forecast. They are the ‘Millennials’.
The Millennials or Gen Y. Born early 1980s through to the mid-1990s.
This group are often labelled and sometimes incorrectly as the entitled, the users of digital technology and social media! Often singled out to spend their time drinking lattes and consuming smashed avocado at cafes. My take on this group is they are clever and exciting.
I sometimes am very much in awe of them as they are smart, risk takers and fast moving. My view on this group is they are going to find the next 5 to 10 years very, very difficult! Employment opportunities will dry up for this group quickly in a restrictive job environment. How will they get on that property ladder without stable employment?
My opinion is that they are likely to struggle. I think they will quickly be impacted. The smart ones will hunker down and start saving. The ones who take work (any work) when they can get it, will survive. The ones who will not accept that hard work is the way forward will struggle. First home buying will become extremely difficult for them in the medium term. Guess who may pick up the slack though or help them through this time?
Generation X. Born 1964 through to 1980.
Unfortunately, this is where I sit. I was born in early 70’s. This is a demographic which will find the next decade rather challenging. Living possibly in their first or second home at the moment. Thinking about selling and upgrading? Maybe with a growing family with kids moving into their teenage years, burgeoning mortgages, new car? Very susceptible to losing one or both incomes in a recession. Quite often they have one person staying at home two or three days a week looking after the kids and perhaps doing a bit of consulting on the side.
In this economy right now, having a part timer working for a business maybe a luxury. So, moving down to one income is a real reality for this group. Be prepared! Some families will be forced to sell off their business (if they are so lucky to have one), sell the Ford Ranger Ute on Trademe, move their kids to public schools, and worst of all need to sell their family home to keep ahead of those bills and monthly outgoings. Guess again who may pick up the slack?
The Baby Boomers most often defined as individuals born between 1946 and 1964, largely born post War World 2.
Let’s focus on why I believe they will pick up the slack. Love ‘em or loathe them, I think they will do well or much better than the rest of us. Yes, they may get a bit of ribbing from the other groups mentioned but let’s flesh them out and why I believe they can do well.
They typically are retired, have time on their hands and often have an interest in property.
Let’s face it, they are better at saving than the vast majority of us.
They don’t like to spend on unnecessary, consumable items which gives them a larger bank balance. Much of the bank balances are in term deposits and the savings account.
They often have an investment property, either by way of wealth accumulation or inheritance. They are used to property and managing them.
They often own holiday homes for the family.
They want to see their children prosper and are ready to set them up if they can during stressful periods.
The final point is they are savvy and have generally seen a lot before. They are ready when the time comes. They love a bargain and will move in when they can!
So, what next then…
Dust off my crystal ball…I would suggest that you will see houses springing to market reasonably shortly. Off-loading of property, especially in tourism effected areas like Queenstown, Wanaka, Rotorua and Air BNB dominated areas up and down the country.
We have already had a spike in calls and enquiries at Proppy.co.nz from people getting ‘sell ready’ over the 4-week imposed lockdown from the government. Baby boomers will move in on new properties coming to market in a forced or offloaded type manner. I believe this could happen sooner than you think?
In areas that have not been so affected by this latest virus outbreak there will still be larger volumes of sales than before. If we look at the latest REINZ statistics for March median prices are well up in areas with attached large cities like Auckland (+11.1%), Waikato (+13.4%), BOP (+13.7%), Wellington (+13.4%), Canterbury (+6.8%), and Otago (+11.3%). Even if we have a correction of prices in April and May (post lockdown) – I would suggest listing volumes will be higher than normal in May and June is my prediction.
My bet is if you are selling, it will be the baby boomers that move in first. Let’s see what happens?
As a side note New Zealand’s only fully online real estate agency www.proppy.co.nz allows for social distancing allowing you to complete transactions via online auctions and online negotiations ( even at Level 3 alert levels). This coupled with generally the lowest commissions across all of New Zealand makes them a safe bet to sell with. Who do you think Baby Boomers will use to either buy or sell?
Boomers are much more tech savvy than what you think and our team is there to help them! They have adapted over their lifetime into using online banking, zoom, and online purchasing so this is much easier for them to use than you may think. In fact, our statistics show that at Proppy.co.nz, 70% of our sellers have been out of the baby boomer’s territory.
Let’s face it, if you are a 60-75 year old person (actually me included in this thinking) you won’t be setting foot in an auction room with a mask and gloves on, or walking into a real-estate agency on the main street for a very long time. So, let’s see what happens.
At least we have easy options and tools for them to buy and sell property immediately.
Take care out there.