| Very often we in the real estate industry on Seven Mile Beach are asked about current property values and whether they will continue to appreciate at such steep rates as those we have enjoyed over the last few years. What is it, people ask us, that is driving the values so much higher, so quickly? The answer is simple, it is demographics.
The baby-boom generation, born between 1946 and 1964, is so large that on a population chart it resembles "Mt. Everest sitting on the Mojave Desert." It encompasses almost one-third of the entire population of the United States - about 80 million strong. As a group they are reaching their peak earning, investing and buying years, and all this is happening at a time when their primary homes are mostly paid off and their kids have been educated. They have the money to spend and the desire to buy second homes, and will continue as a group to purchase well-located resort property for the next thirty years.
There is a second, unstoppable force that will also continue to drive the market higher in the years ahead. According to a study by two professors at Cornell, over the coming decades, baby boomers will inherit a staggering $10.4 trillion in wealth from their parents, the World War II generation.
Talk about a rising tide lifting the resort real estate markets higher! That's a river of wealth of $223 billion bidding up the prices of vacation homes every year for the next 40 years! This tidal wave of money will be the single most important factor dominating the resort real estate market for decades to come. It's Economics 101 - when demand for anything exceeds a limited supply, prices surge. The supply of homes on Seven Mile Beach is obviously limited, and with this tidal wave of money chasing the same supply of homes, prices can't help but appreciate for many years to come. Those who purchase now on Seven Mile Beach will enjoy increasing values for many, many years to come.
Note - The above are the personal opinions of the author, based on the author's professional experience, personal observations, and thought-provoking readings of numerous analysts' reports and books, such as Harry Dent's, "The Roaring 2000's Investor" and Faith Popcorn's, "Clicking." |
