The Economist Magazine

There are 281,421,906 people in the USA; 105,480,101 households. Median household income was $42,257 in 2000. A majority of households, 87%, earn less than $100,000 per year. Only 33.7% of current homes are worth over $150,000. Why do so many real estate developers believe that more Americans can even afford a second home? Is there really a second home bonanza on the horizon?

The bonanza believers sight the aging Baby Boomers and their soon to arrive inheritances as top reasons for a second home boom.

This report attempts to refine some conventional wisdom:

Myth: Baby Boomers are going to inherit fortunes and will be able to afford multiple ‘whole ownership’ retirement homes and live luxurious lifestyles in retirement.

Fact: Most Baby Boomers will not be able to afford 2 homes in retirement, and the wealth transfer is going to affect far fewer boomers than previously predicted. They will need be more practical while enjoying the luxury of a second home in the sun and will choose fractional ownership, condo hotel or timeshare to afford multiple residences. As established by whom/what? I think it is important to state this.

With 78 million boomers (27% of the US population) reaching retirement age in the next 15 years, seeking retirement nests, and in their peak earning/savings years, it is easy to get giddy about the prospects for second home sales. Add to this statistic, The Wealth Transfer Effect, estimates range from $2 to $136 trillion in wealth will be inherited in the next 20 years, exuberance seems warranted. I don’t understand this statement – is this better: “Add to this statistic “The Wealth Transfer Effect”: estimates range that from $2 to $136 trillion in wealth will be inherited in the next 20 years, therefore the exuberance seems warranted”

The troubling questions are:

1.) Inherited wealth is a constant in an economy, what makes this so special?

2.) Will the money just stay in the family?

3.) How does this transfer of wealth change our economy and housing market?

How big is This Wealth Transfer?

Ken Dychtwald of Age Wave, Inc. reports that people over age 55 currently control nearly two-thirds of all the nation’s financial assets. They own some 40% of all mutual funds, 60% of all annuities and 48% of all luxury cars. The WWII generation’s thrift has however shifted toward consumption in recent years. Consider the bumper sticker, “Retired – Spending My Children’s Inheritance.” Reports indicate that the percentage of those older than 65 who say it’s important to leave an inheritance dropped to 47 percent in 2000 from 56 percent in the early 1990s. Only 22 percent of people over 65 plan to make a significant bequest. Why? One explanation is that families these days are more geographically dispersed, stretching familial ties.

American Demographic Magazine reported in 2003 “A weak economy, a sputtering stock market and a Social Security system that may run dry are all fueling skepticism regarding the size of the transfer of wealth from Boomers’ parents to their children. Since 2001, the stock market meltdown has erased some $8 trillion in shareholder wealth, slashing the net worth of Boomers’ parents. Plus, Americans are living longer, to an all-time high of 77.2 years in 2001, and increasingly cracking their nest eggs to fund their own extended retirements.” “Boomers are too numerous to expect a windfall,” says economist Laurence Kotlikoff at Boston University. “I’m sorry to burst anyone’s bubble, but there’s no economic justification for any bonanza inheritance.”

Less than 20% of boomers have yet to receive any inheritance, and the average bequest has been less than $50,000. More than 104 million (37%) are over 40 years old and looking for bequests from 33 million (12%) seniors, bequests that haven’t even started to flow yet.

If every WWII senior has a $100,000 net worth to bequest, $3.3 trillion will be divided; potentially $32,432 per boomer. $32,432 is hardly a windfall that will power a second home boom? Are you asking or stating? If asking, rephrase; if stating, remove ?

“Comparing themselves to their parents, 75% admit they’re more self-indulgent and 67% believe they’ll live longer. Yet Boomers understand that their lifestyle comes at a price: 84% recognize that they have to make more money to fund their retirement. A whopping 80% plan to work at least part-time during retirement, and 23% say they are counting on an inheritance to help fund their retirement. With this patchwork safety net, 65% of Boomers feel confident that they will have enough to retire in comfort. John Gist, associate director of the Washington, D.C.-based AARP Public Policy Institute, says that while many Boomers are better off than their parents were at the same age, “their expectations are also greater, and some will find their resources falling short.” From May 2003 issue of American Demograpics. If 84% of boomers do continue to work in retirement, a long term second residence is likely out of the question, but a shorter term seasonal second home will likely be more desirable.

In 2000, 33 million (12%) American households earned over $100,000. Second home buyers are typically between the ages of 47-62 years old, with household incomes over $100,000. This demographic is roughly 2.64% (22%x12%) of the US population or 7.4 million people in 2005.

If we assume that the wealthiest earners (12% over $100,000 in income) also have the highest net worth today, and that their parents also have higher than average net worth, we can expect that this cohort will receive larger than average inheritance. The wealth would stay in the family.

Today’s distribution of wealth is easily seen in existing home values. Consider only 33% of homes are over $150,000 in value, 9.1% were over $300,000, and only 2.9% were over $500,000.

Using this math, we can project the market demand for boomer retirement housing, using a few assumptions:

1. Boomers make up 27% of the population

2. They will demand a home of equal or greater value in retirement

3. Everyone wants to retire somewhere, and they would like to own it if possible

There may be demand for 10.5 million homes/condos/aggregate fractional shares over $150,000, 2.8 million over $300,000, and 900,000+ valued at over $500,000. This math correlates closely with the 7.4 million boomers with means to own a second home.

The only surprise in this data might be the idea that “fractional ownership shares” are mentioned in the analysis of this data? But it shouldn’t be. This is a generation that has ‘rethought’ all conventional views, and their retirement home of choice will not likely be in a traditional retirement community. Many boomers are awakening to the option of owning multiple residences by owning only the piece they want to use.

In 1980, only 32% of automobiles were leased. By 2004, over 70% of new cars were leased. Affordability and the desire to have a new car every 2-3 years was the reason. “Why own a whole pie, if you only want a piece?” was the advertising campaign that started the change of consumer acceptance of leasing. What will change the second home industry?

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There are 281,421,906 people in the United States; 105,480,101 households. Average family income was $ 42,257 in 2000. The majority of households, 87% earn less than U.S. $ 100,000 per year. Only 33.7% of the existing houses are worth about $ 150,000. Why are so many real estate developers believe that even more Americans can afford a second home? Is there really a gold mine second house on the horizon?

Sight goldmine faithful of aging baby boomers and their inheritance soon as the reasons topfor a boom in second home.

This report seeks to refine some of the common opinion:

Myth: Baby boomers will be able to inherit property and can live more 'homes-owned' retirement and allow a luxurious lifestyle in retirement.

In fact: the baby boomers will not be able to afford 2 apartments in retirement, and transfer of assets will be affected vintages much less than previously expected. You need more practice and enjoy the luxury of a secondTo decide home in the sun, and fractional ownership, condo hotel or provide more apartments in timeshare. As stated by whom / what? I think it is important to this state.

With directions to reach 78 million boomers (27% of the U.S. population) retire in the next 15 years, the pension of their nests, and in its peak earnings per year of savings, it is easy to cheat the outlook for the second sale of residential property preserved. In this statistic, the wealth effect of transfer, the range of estimates from $ 2 to $ 136Billions of dollars of wealth will be inherited in the next 20 years, it is justified exuberance. I do not understand this statement – which is better: "In these statistics," the actual transfer of wealth ": Estimates range that are handed down from $ 2 to 136 trillion U.S. dollars in wealth in the next 20 years, so l ' exuberance seems to be justified "

The questions are troubling:

1.) Inherited wealth is a constant in an economy that makes them so special?

2.) Will the money stay in theirFamily?

3.) How does the transfer of wealth in our economy and changes in the housing market?

How big is this transfer of wealth?

Ken Dychtwald of Age Wave, Inc. reports that people over 55 years, currently almost two thirds of all financial activities of the nation. They have about 40% of all funds, 60% of all pensions and 48% of all luxury cars. The generation of World War II, frugality, however, consumption has shifted in recent years. Look at the sticker, "Retired – CostsInheritance of my children. "Reports indicate that the percentage of those over 65 say it is important to leave an inheritance fell to 47 percent in 2000 from 56 percent in early 1990. Only 22 percent of people over 65 plan to do a significant discount. Why? "A statement that families these days are more geographically dispersed, stretching family ties.

American Demographics magazine reported in 2003, "a weak economy, a sputtering stock market and a social Security system, which can run dry are all fueling skepticism about the size of the transfer of wealth from Boomers parents, their children. Since 2001, the stock market crash, about 8 trillion U.S. dollars of dollars in shareholder wealth has eliminated, dramatically reducing the net worth of Boomers parents. "Plus, Americans are more alive for a time high of 77.2 years in 2001 and increasingly cracking their nest eggs, which are extended to finance their retirement." Boomers are too numerous to wait for the extra money, " says> Economist Laurence Kotlikoff of Boston University. "I'm sorry for the breaking of people, but there is no economic justification for a legacy gold mine."

Less than 20% of years have not yet received any inheritance, and the average discount was less than $ 50,000. More than 104 million euros (37%) are more than 40 years and looking for discounts of 33 million euros (12%) seniors, bequests, which has not yet begun, but smooth.

If every World War II, a senior U.S. equity $ 100,000 inheritance3.3 trillion U.S. dollars will be spent, maybe $ 32,432 for boomers. $ 32,432 is not a fluke that the boom of the second house will power? Ask or identified? When asked to reiterate that if you remove stating,?

"If you compare themselves, their parents, 75% give them more lenient, and 67% believe they intend to live longer. Boomers, but that their lifestyle has seen its price: 84% says they must pay more money to fund their retirement plan. An impressive 80%, with at leastPart-time in retirement, 23% say they rely on a wealth to help finance their retirement. This patchwork of network security, 65% of Boomers feel pretty sure that it is easy to retire. John Gist, associate director of Washington, DC-based AARP Public Policy Institute, says that while many vintages are better than their parents were the same age, their expectations are greater, and may lose some of their resources. "Since May 2003Issue of Demograpics American. When I do 84% of the years continue to be retired a second home in the long term probably not work, but a shorter duration of the second house of the season will probably be more desirable.

In 2000, earned 33 million (12%) families in the United States more than $ 100,000. Second home buyers are usually aged between 47-62 years, household incomes of more than 100,000 U.S. dollars. This population is approximately 2.64% (22% x12%) of the U.S. population or 7.4 million people in2005

If we, the richest income groups) (12% over $ 100,000 in income and net worth higher than today assume that their parents and also exceed the average value of the net, we can expect that this group is greater averaged for inheritance. The richness of family life.

The current distribution of wealth is easily visible in the values of existing homes. You're looking at only 33% of households were more than $ 150,000 in value and 9.1% were over 300,000 U.S. dollars, and only 2.9% compared toU.S. $ 500,000.

Using this can mathematicians, can the market demand for housing boomer retirement, with some assumptions:

1. Boomers account for 27% of the population

2. Will there be an equal or greater value house retired

3. Everyone wants to retire somewhere, and they want them, if possible,

You can reduce the demand for 10.5 million homes / villas / aggregate fractional shares of $ 150,000, 2.8 million more than $ 300,000 and 900,000 + worth over $ 500,000.These mathematics have correlated closely with the boom with 7.4 million the tools to become a second home.

The only surprise of this data could be the idea that "are called fractional ownership shares for the analysis of data? But it should be. This is a generation that has "open", not all conventional beliefs and their retirement home of choice is likely to be in a traditional retirement community. Many volumes are awakening to have the possibility to get only the number of residencesPieces that want to use.

In 1980, only 32% of vehicles were leased. Since 2004, over 70% of new cars were leased. The accessibility and the desire for a new car every 2-3 years has been the reason. "Because even a cake if you just want a piece?" was the advertising campaign, which started the change in consumer acceptance of a lease. What has changed with the second home for the industry?

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