Baby Boomer stay at home.
by John G. Agno
Published on this site: April 13th, 2005 - See
more articles from this month...
The "me-first" generation has now decided that second
homes are another birthright as they approach retirement age.
Second homes soared last year and accounted for more than a third
of all residential sales transactions. A Washington-based
National Association of Realtors study showed that nearly
one in four U.S. homes bought in 2004 was purchased for investment
purposes; 13 percent were bought as vacation homes. Together,
that constituted the surging second-home market, which accounted
for 36 percent of the 7.7 million homes sold in the country
last year. Second home sales rose 16.3 percent from 2003.
As inflation pushes interest rates higher while wages stay the
same, most economists expect the housing market to cool, making
shoppers more dependent on their paychecks for living expenses.
For the economy, a slowdown in home demand and prices could
reduce consumer spending. In the last three years, from 2002
to 2004, homeowners who refinanced their mortgages took out
$400 billion in extra cash which was pumped back into the
economy. That source is going to dry up.
The danger is that people, despite their home-equity cushion, will
rein in their spending, stay at home and pull the rug out from under
the economy.
We are already seeing the beginning of the slowdown with the loss
of jobs happening the fastest in the arts, entertainment and recreation
sector. Recreation, gambling and amusement jobs are down 30,900
from last year, performing arts and spectator sports jobs are down
15,300 from March '04 to March '05. Baby Boomers are staying home
and enjoying their big-screen TVs or browsing the Internet while
saving money in gasoline and hotel charges.
Watch for RV and boat sales to go South as the Baby Boomers' discretionary
expenditures are now mostly tied up in the price and furnishing
of their second homes.
For more on real estate bubble bursting and its affect on the economy,
go to: http://home.att.net/~coachthee/whats_new/index.html
John G. Agno, certified executive & business coach
Signature, Inc., PO Box 2086, Ann Arbor, MI 48106 Telephone: 734.426.2000
(US Eastern Time Zone) Email: mailto:[email protected]
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