TheLandJournal.com

Get in now or expect to be kicking yourself down the road. Some of you may wonder what on earth I am talking about – “Of course pricing will go up!”, you may say.  But I believe we are not in for a steady incline, but rather a boom in pricing, and here is why.

In order for prices to boom, there needs to be a driving force.  In this case, it isn’t a what, but rather a who.  Who is going to be a big part of driving these prices up? Baby Boomers, of course.  Don’t they get blame and credit for everything these days?  The first batch of Baby Boomers are turning 60 this year - over one quarter of the 78 million Baby Boomers are of the ages of 55-60. Now that’s a lot of collective influence!  Retirement is just around the corner for many of them, with thousands more turning that corner each day.

Am I assuming they will all want to live in rural areas? Not exactly.   But, I do know that a great many of them will retire to rural areas – either small rural towns, or large pieces of undeveloped country land.  But even if a Boomer doesn’t make the move to the country, many plan to buy property either as a second residence or as an investment.

A survey sample of 2,000 baby boomers conducted for NAR by Harris Interactive® showed that, ten percent of boomers indicate they plan to buy some form of real estate within the next year, which corresponds with U.S. Census Bureau data that shows 3.5 million boomer households moved during the last year. Two-thirds are considering a primary residence, but the rest are thinking about land, second homes or commercial property.”

“Half of boomers who live in an urban area would like to retire in a small town or rural area,” the survey showed.

According to Unitedcountry.com, a website that lists rural properties for sale, 40% of Baby Boomers plan to retire in rural areas. Additionally, rural areas grew by 3 million people in the 1990s and two thirds of those moved from urban areas. This trend continues today.

United Country claims that the Baby Boomers who are already buying retirement homes in these rural areas are key factors to the continued success of their business.  Since boomers are just beginning to hit retirement age, they expect it to continue for another 20 years.

You may be wondering if Baby Boomers alone are enough to drive the rural real estate pricing boom that I believe is coming on fast.  My prediction is actually based on much more than that.

not just Baby Boomers who are poised to take the rural real estate plunge.  With the practice of working from home becoming more and more accepted by traditional companies, the lure of living in the city and making a 1 hour commute at 10 MPH to go 15 miles is wearing thin.  While some people love the city and compact living, many others are letting their preferences be known by making the move to rural real estate because of work from home opportunities presented to them by their employer.  In most major cities, $500,000 would buy you a aging home in a downtrodden area, but you can have a 5 bedroom, 3 bath home on 20 acres (or more) in many rural areas for that price. The fact is that more and more companies are relaxing the reigns on their employees to work from home. With the Internet and todays collaborative technology, it’s very easy to be just as effective in the home office as in the corporate office.

“Water-cooler time costs money,” said Mark Mehler, co-founder of CareerXroads, a New Jersey recruiting and consulting firm. “If you can do one, two days a week from your home office, you’re a lot more productive.”  The executives that they surveyed recognize those advantages: 78% reported that their telecommuting workers were more productive than or as productive as office-bound colleagues.

But we must consider this technological barrier before the boom occurs: what do many rural areas lack that makes it nearly impossible to have the option to move out of the city and work form home? You guessed it, broadband Internet. This is practically mandatory in most professions.  Being on a phone call while in a voice chat conference and logged into multiple accounts and websites is just not going to work on a dial up 56K phone line. Expect to see some major improvement in availability of brandband Internet in rural areas very soon!  How is this going to happen and who is behind it? It’s already happening and many groups are behind it, including our state and federal governments.

One supporter is a company called Fairpoint out of Portland Maine. The company’s plan begins with buying Verizon’s holdings in Maine, New Hampshire, and Vermont and then they plan to drop $200 million into their infrastructure. This, they say, will greatly increase broadband availability to rural regions in these states. Gov. Jim Douglas of Vermont is assisting with his own efforts to get broadband out with his program called the “E-State” initiative.  Gov. John Baldacci of Maine has a program as well, called “ConnectME”.

President Bush has said:

“This country needs a national goal for…the spread of broadband technology. We ought to have…universal, affordable access for broadband technology by the year 2007, and then we ought to make sure as soon as possible thereafter, consumers have got plenty of choices when it comes to [their] broadband carrier.”

There are multiple bills in various stages of development that will pour more government money to assist this goal.  It will soon be a thing of the past to be tethered to a city in order to have a high paying career.

So I say it again: Rural land will grow in value more than most people expect and this trend will continue for many years to come.   This is because:

- 78 Million Baby Boomers are nearing retirement age and many surveyed say they plan to buy land and retire in a rural area.

- More and more companies are allowing employees to work from home due to the increased productivity that home workers experience, and the wider availability of broadband in rural areas.  High salaried professional are no longer required to live within the confines of a city to have a city job.

- Broadband companies, state, and federal governments are working to immediately provide rural areas with access to broadband Internet, which will further increase the exodus from cities to rural real estate.

What are you doing to be sure that you are ready to be a part of the boom?

Resources used:

http://www.realtor.org/press_room/news_releases/2006/baby_boomer_study_06.html
http://unitedcountry.com/aboutus/press_room/downloads/where_boomers_go.pdf
http://www.southcoasttoday.com/daily/01-07/01-17-07/06state-region.htm
http://www.latimes.com/business/careers/work/la-fi-tele17jan17,1,1831831.story?coll=la-headlines-business-careers