[quote=carlsbadworker]CAR, whether baby boomers will be looking at liquidating their houses does not matter. They are switching from one form of housing (owner) to another form of housing (renter). It doesn’t change the overall demand for shelter. Real estate investors as a supply of these shelters (again either in the form of landlord or seller) would benefit if the demand grows.
By default, the demand will grow due to new household formation. Renter affordability will slow the household formation but I don’t see it will reverse the trend.[/quote]
Yes, you are correct, CBDW. I meant that they would likely sell and move to a more affordable area. I know many, many people (quite possibly, the majority of people I know who have retired in recent years) who’ve moved to “flyover” states the moment they retire.
The investors who are buying in areas like Detroit, etc. may very well be better off in 10 years than the ones who are buying relatively expensive rentals in low-income areas in California. The rentals in low-income areas, especially if they really stretch the budgets of the renters, will probably end up being a much larger burden than most of these investors expect.
If/when the renters realize that their landlords are large investment funds — who are often thought to be responsible for the “foreclosure crisis” that has forced many of these people to become renters, the off-shoring of decent American jobs, and general decline in quality of life for most working Americans — these renters may feel strongly compelled to burn these investors as badly as possible. I don’t think these investors really understand what they’re getting into.
I think the long-term trend of people moving from the interior of the country to the coasts just might reverse over the next few decades as more and more people seek to buy their own homes, but can only do so in these cheaper states. As many have pointed out in other threads, incomes in other areas are about the same, while the cost of living is often substantially lower. If someone doesn’t have family and/or deep roots here, the “sunshine tax” argument becomes less compelling, especially if people are not able to buy their own homes here.
