From the Record:
Empty-nesters Dan and Christa Mondoro put their five-bedroom Franklin Lakes house on the market last summer. Since their two adult daughters have moved out, Christa Mondoro said, “it just didn’t seem to make sense for the two of us to stay there, as much as we love the neighborhood.”
It’s a decision a lot of baby boomers are making.
“They’ve have had the kids, they’ve had the back yard. The kids are gone, and now this big house they’ve had for so long — it’s time for them to move to something that’s more cost-effective and energy-efficient,” said Gina Palumbo, an agent with Abbott & Caserta in Wyckoff.
As members of this giant generation — 77 million people born between 1946 and 1964 — downsize or move to sunnier and lower-tax areas, some analysts wonder if there will be enough younger buyers who will want and can afford the supply of large, suburban family homes the boomers are leaving behind. If demand slackens, prices are likely to drop.
The problem is simple, said Dowell Myers, a professor of demography at the University of Southern California: “There are too many baby boomers.”
“There’s very little evidence that the large suburban homes that baby boomers may be looking to sell will actually sit there vacant and unused,” said Paul Bishop, vice president of research at NAR. “At some price, people will be willing to buy large houses in suburbia. They may be worth less than the sellers hope to get. … It’s a very dynamic market.”
The Mondoros expected their house — on the market for just under $1 million — to be snapped up quickly, probably by a family with young children, people like the Mondoros when they bought the house almost 20 years ago. So far, that hasn’t happened.
“I don’t think our kids are as fortunate as we were, given the job market,” said Christa Mondoro, 55. “I don’t think kids have the same resources we had. A lot of them have student loans. And the ratio of earnings to home prices seems different now than when we were starting out.”
It’s by no means certain how the aging of the baby boomers will affect the housing market. A number of factors are at work. For example, the many baby boomers plan to work past the normal retirement age — whether by choice or necessity — which means they’re not moving to Florida as soon as they might have.
And George Masnick, a fellow of Harvard’s Joint Center for Housing Studies, argues that younger generations are larger than their initial birthrates would suggest, since immigration added to their numbers as they grew up. Masnick says that both the “baby bust” generation and the millennials now number more than 80 million, thanks in part to immigration. That widens the pool of potential buyers.
Palumbo, for one, thinks immigrants could be potential buyers for baby boomers’ big homes, especially immigrants who need space for elderly parents. And Bishop said that surveys show that immigrants and their children are just as interested in becoming homeowners as non-immigrants.
Jeffrey Otteau, an East Brunswick appraiser who tracks the housing market statewide, believes that location will be become even more crucial when a large number of boomer houses hit the market. Homes in the most sought-after towns, with excellent schools and easy commutes to good jobs, will still sell. But there’s likely to be less demand for larger homes in exurban towns that require long commutes, he said.
The Mondoros, who are moving to a town house in Rockland County, say they’ve had a lot of lookers at their Franklin Lakes home. But so far they’ve received only one offer, for less than they were willing to accept.
“I thought it would sell quickly,” said Dan Mondoro, co-owner of a business that installs high-end audio and video systems. “It’s in great shape.”