Lots of decisions were made during the Pandemic especially when it came to where to live, how to live and what to do moving forward. The housing market across the US was heavily impacted by these decisions and one group stands out. Many 'accelerated retirees' (those close to retirement) moved to where they ultimately would retire full time, and continued working remotely while transitioning to their next stage of life. Armed with cash and wealth - and urgency - in areas across the US that often appeared 'cheap', this group competed with 'regular' more local buyers and helped drive pricing up. Although the Monterey Peninsula was never 'cheap', the weather, natural wonders, and varied lifestyles attracted Bay Area and Central Valley contributing to the historic sales volume and rising home prices. Here's what happened.............
Those approaching retirement age saw the ability to work remotely and continue working a few more years without the essential need of being in the office 5 days a week.
Many soon-to-be-retirees felt much wealthier as equity markets and asset prices soared in value driven by low rates and excess cheap capital.
Many pre-retirees saw a new opportunity to sell their large empty-nest homes that in areas had been more challenging to sell...for a premium. This compelled them to accelerate plans armed with this wealth and the potential for the opportunity to sell at a premium ending.
Many close-to-retirement-age people had always planned to move to warmer, lower tax states or destination areas like the Monterey Peninsula where they could be close to their hobbies in their retirement years.
Many close-to-retirement-age people bought homes in areas away from cities they lived close to because they were cheaper or less crowded. In many parts of the country they competed with lower-budget buyers in a manner that made those buyers incapable of competing.
While in the past they may have sought smaller homes less attractive to younger families needing more bedrooms, with the new need for home offices, they competed directly with first time buyers.
Many pre-retirees competed in areas that were not building enough homes to offset demand, further driving up prices for everyone. The only reason other buyers could compete at times was due to the era of super-low interest rates.
Source: L. Steinberg, Compass