Summit County, Colorado is sitting smug in this realty crisis (if we admit there is one!) And why are some areas just breezing along while other areas are spiraling down the center of a tornado? Summit County is admitting that there may be a large inventory of the over $1million houses, but that the under $600,000 are just moving right along and sometimes with multiple offers!
One realtor in Summit County puts it all down to the baby boomers, and in Scottsdale and other prime retirement areas the buying up of second homes (often by baby boomers) is also recorded to be keeping the realty markets healthy.
Usually baby boomers - because of their age - are amongst the experienced borrowers in the realty market, and would not have had to negotiate any kind of mortgage that would lead them into the sub prime mess that we read about.
This means that if you are still looking for a realty investment, then any of these prime retirement areas would likely be a safe investment in a steady market. From an investment viewpoint they may even increase drastically in 2011 when the first wave of baby boomers officially reach 65!
Baby boomers are the prime buyers of second homes. They are either going to retire to them, or they are already retired and snow-birding it - so they want two homes. These baby boomers are reported to be the last generation that will have a generous private pension. They have also been saving for a long time, as they are from a generation that was taught the sense of saving and most of them have also benefited from the jumps in real estate prices. (Real estate has approximately doubled in the last ten years.)
Another reason that the baby boomers are still buying into today's market is that they have seen mortgage rates of up to 13% in their time - and they KNOW this can happen. Consequently a rate of 6.5% that you can actually lock in for 15 years - and therefore budget your income - is a very good business proposition. Also it is often possible to get an equity mortgage if you have a large amount of paid off income in the home you are living in. However, here a home owner must proceed with caution; some people have taken so much 'back' from their houses that as the prices have dropped in their area, they have no chance of selling their home yet.
Another plus in buying a home is that the IRS will give you a tax break on it! The interest paid on a mortgage is tax deductible.
If the area you live in has been prudent about the issuing of building permits, and have limited the number of new properties coming on the market, this can keep the real estate market more active. A glut of new homes finished all at once tends to flood the market. This is a local factor, but it is the local factors that are keeping many areas off the national grid of falling prices.
