State of the Market
- April 30th, 2010
- in Yachting
Next Decade – According to Housing in America: The Next Decade, a new research paper written by John K. McIlwain, the effects of widespread foreclosures and their drain on market values in the US will result in a fundamental change from the long-held notion of homeownership as the ultimate American Dream.
McIlwain suggests that US demographic shifts for the coming years could become major forces in the housing markets of both the US and their second home countries such as the BVI. Aging Baby Boomers (55-64) will continue to work, many will stay in their homes until values recover. This group has lost a very large part of its wealth and ability to invest. Younger Baby Boomers (46-54) also will not be able to sell their homes at what appreciation they intended, and may not move as quickly as in past years. Their ability to purchase second homes will be greatly diminished because of flat incomes and less home equity. And Generation Y, actually larger in number than the baby boomers, has grown up with computer technology. They are less interested in homeownership than previous generations, have smaller incomes, and want walkable, connected communities which are green.
McIlwain explains that this disillusionment over homeownership as a way to build wealth could persist for decades to come and to place more emphasis on buying for shelter rather than investment purposes. The shift away from using real estate as a means to build an investment portfolio could be felt throughout the region. He concludes that many will still be able to afford to own vacation homes but the numbers of those buyers who will be from the US, according to this study, will dramatically decrease. To read more of McIlwain’s paper, see www.rismedia.com.
We are somewhat fortunate in the BVI that wealth creation is rarely the primary motivator behind buying a home here, although it is considered a relatively secure investment. And our buying audience is broader than just the US. For example, out of 16 waterfront homes sold at Nanny Cay Marina in the past year or two, less than 40% of the buyers are from the US. It’s for this reason that Coldwell Banker BVI actively sought representation from Savills here in the BVI. Savills' network in the UK and Europe, after only a few months of our association, has led to a dramatic increase in the level of interest from potential buyers across the Atlantic. Interest generally is definitely up for realistically priced, well designed, well maintained homes.
Photo by Owen Waters.
We are fortunate in the BVI because, as mentioned earlier, wealth creation has rarely been the primary decision in ex-pats buying homes. True, most have, and will continue, to do relatively well from their investments. But occasionally in a place as beautiful and unique as the BVI, you can throw economic logic out the window and allow your emotions to have some say in the matter.