A new challenge has been emerging throughout the real estate markets worldwide. Many smaller, more affordable entry-level homes have two audiences, not just the obvious younger, first-time home buyers. Yes, retiring and downsizing Baby Boomers are now competing with first time home buyers for the same properties. We found this to be very true in downtown Chicago, further out neighborhoods, and the suburbs.
The biggest challenge is that the Boomers often have the better finances as a result of a lifetime of work and savings. They can offer more appealing financial profiles to sellers, often all-cash offers. More challenging is that to downsizing Boomers, paying over the asking price is more easily achieved. Often the smaller, cheaper homes appear really cheap when compared to the large home they may have just sold. And knowing they are older and, as we keep hearing "time is the last luxury,” they are not in a wait-and-see mode. They want instant gratification even if it costs more. Worse, many are buying two or even three lesser priced homes in multiple parts of the country to maximize their retirement years. And selling a big house makes this more easily affordable for many.
Granted, Millennials have started being the beneficiaries of the great wealth transfer via inheritance or gifting, worth $68 trillion, which further compounds the bidding war between them and the Baby Boomers. It could take at least a decade to catch up with US under-building, and it may take even longer to catch up on the more affordable entry level homes as many builders prefer building the more profitable higher priced homes.
Whether you are a Millennial first-time home buyer or a Baby Boomer looking to downsize, Team Chris & Chris would love to help you. We can relate to you Millennials well since we have two Millennial children of our own. And we have an obvious connection with you Boomers since we are in that group as well. We downsized from our house in Lincoln Park several years ago to a small condo building in the same neighborhood. Of all the 2-bedroom units in our building, half of the owners are Boomers who have downsized, and the other half are Millennial first-time home buyers who stay until their families outgrow the space. We can relate to both groups, have had success with both groups buying and selling, and have employed some very effective strategies to win in the bidding wars. Just ask us!
