debt clock

The baby boomers who are comfortably on their way out will ignore my rantings about the potential for boomer liquidation sales.  My concern isn’t because some boomers are over-encumbered, it’s because they are encumbered enough that the debt will force them to make decisions.  I’m talking about older, retired people who still have a small to medium mortgage balance, and are down to their last $500,000 or less.

It is bad enough that the federal government has their own debt – Nick surmises here that the bolstered economy is giving politicians that idea that more debt is available:


What could cause boomers to quietly hit the panic button?

  1.  Debt Relief – If boomers have to pick up more of the federal tab, or live on reduced Social Security – just the lower monthly income could make them cash out.
  2.  Freedom – A neighbor of mine just sold and moved to La Paz, Mexico. The main reason was to pay off the mortgage, and live debt-free.
  3.  Cost of Health Care – Everything from a serious health event to moving into assisted living could cause boomers to sell their house.
  4.  Help Their Family – Boomers will do anything for their kids or grandkids.
  5.  Home Maintenance – The house is falling apart.  For many, the cost of repairs sound more daunting than moving.
  6.  Flat or Declining Home Prices – When old people are down to their last few bucks, the mental struggle alone causes panic.

If it is just a few folks here and there, the demand for housing in quality locations will be happy to pick up the slack.  Could there be a flood?

This came out last week:

Last month the Federal Reserve spread the word that U.S. household debt hit $12.29 trillion in the second quarter, up $434 billion from a year earlier as auto loans and credit card debt increased. Auto debt was $1.10 trillion, up $97 billion from a year earlier, while the aggregate credit card limit increased for the 14th straight quarter. Mortgage debt was $8.36 trillion, up $246 billion from last year, while student loan debt was $1.26 trillion, up $69 billion. Some 4.8 percent of the outstanding debt was in some stage of delinquency, down from 5.6 percent from a year ago, according to the quarterly household debt and credit report. My statistics teacher would hate this, but, roughly speaking, at 320 million of us in this country, this works out to about $38,400 per man, woman, and child for all debt.

Somebody owes a lot of money, and if it happens to be boomers who panic in unison, some neighborhoods will be in for quite a ride!


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