Accelerated (Pre) Retirement
The past two years saw many people accelerate plans they'd been mulling for months and years. One potent group were the 'accelerated retirees' who moved to where they ultimately would retire full time, and continue working remotely while transitioning to their next stage of life. The consequences of this somewhat unnatural moment has entailed the following:
1. Those approaching retirement age saw the ability to work remotely as this became more normalized globally and continue working a few more years without the essential need of being in the office 5 days a week.
2. Older people with established networks and careers are mostly not in career-building mode that requires more face-to-face interactions with a greater ability to connect, forge deeper relationships and friendships that fuel careers and drive promotion opportunities. They are much more easily equipped to work remotely successfully. Some plan to continue working fewer hours well into their 70's and 80's made more possible now than ever before.
3. Many soon-to-be-retirees felt much wealthier till recently as equity markets and asset prices soared in value driven by low rates and excess cheap capital.
4. Many close-to-retirement-age people 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.
5. Many close-to-retirement-age people had always planned to move to warmer, lower tax states or more remote areas close to their hobbies for their retirement years. Many saw their friends moving there too which also accelerated their plans.
6. Many close-to-retirement-age people bought homes in areas away from the large high-cost cities they lived close to because they were much, much cheaper. They competed with lower-budget buyers in a manner that made those buyers incapable of competing: they were cash rich too. 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 these first time buyers.
7. Many close-to-retirement-age people competed in areas that were not building enough homes to satisfy this new, accelerated 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.
The accelerated close-to-retirement-age buyer may be one of the biggest contributors to recent housing inflation, especially in areas attractive to this demographic. Armed with cash and wealth - and urgency - in areas that often appeared 'cheap', this group competed with 'regular' more local buyers and helped drive pricing up, up, up. While I'd suspect this surge will pause a bit now as asset values/wealth have decreased, with 10,000 Americans turning 65 every day.......you do the math.
Thanks to Leonard Steinberg of Compass NYC for the tips!
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