The Baby Boomer generation affects much of the U.S economy. As one of the largest generations in the history of our nation, our industries grow as they mature. When they were young, baby food and diapers were industries of choice. As they get older, you will notice more retirement and health-related commercials.
I've attended many classes on the effect of the Baby Boomer generation on real estate. At this moment, they are entering retirement age although many are not retiring. Baby Boomers will affect the job market because many have not saved enough to retire. They will also affect the second home market since many are cashing out on the equity in their current homes and buying second or third homes in other areas.
Inman News published an interesting article on the topic. The article covered one of their strategies of avoiding capital gains by performing 1031 exchanges.
Four out of 10 respondents who own a vacation home or seasonal property intend to eventually make that property a primary residence. Historically, other NAR survey data shows only one in five vacation-home buyers had such intentions when they first purchased the property.
Lereah said this has emerged as an investment strategy. "Some boomers will take advantage of generous capital gains exclusions from their taxes when they sell their primary residence, and then place themselves in the position of being able to convert a vacation home into their new primary residence, which would later become eligible for the same tax treatment," he said.
"Then, if their needs change in the future, they'll be able to take the capital gains tax break after they have lived in that home as their primary residence for two out the five previous years. It becomes a great way to build and protect a nest egg."
Read more at TopProducer.com
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