By Diana Hill, Online Trading Academy Real Estate Investor Instructor

"… strategic inflection points do not always lead to disaster. When the way business is being conducted changes, it creates opportunities for players who are adept at operating in the new way. This can apply to newcomers or to incumbents, for whom a strategic inflection point may mean an opportunity for a new period of growth." Andrew Grove of Intel

What, in the real estate industry, will be creating opportunities in the future? People will always need a place to live and work. But that place might look different than it did in the decades since WWII and massive suburbanization has been in vogue. Will this be the decade of urbanization?

Let's look at some demographic changes and trends that might give us a view into that future.

There have been signs of these new trends for years, but this last recession has strengthened the trends and affected where people live, whether they will own or rent, and the size and style of the homes they choose. It is clear that these choices in the future, whether by desire or necessity, will be different than what we've seen in recent history (last 50 years).

The four major demographic waves in the U.S. to watch for are:

• Aging Baby Boomers (the oldest of which are now in their mid-sixties)
• Younger Baby Boomers (youngest of which are in their late forties)
• Kids of the Baby Boomers: Groups called Generation X, Generation Y, the Millennials, the Next Generation, the Net Generation, or the Echo Boomers, comprise over one-half of the U.S. Population
• Immigrants, their children and grandchildren, who are growing more rapidly than "native born" households

Let's start at the top and first examine "Aging Baby Boomers." There are 78 million Baby Boomers; the oldest will become 65 in 2011. Starting at that point, the population of "senior citizens" is projected to grow faster than the total population of the U.S. We will refer to this group as "Aging Baby Boomers;" they only represent one-third of the total group.

Boomers have redefined every age they have entered and the older ones will do so again. They don't see themselves as aging; instead, the "60 is the new 50" and so on. Most are pushing back retirement for years both because they are working at jobs they enjoy and because they need to rebuild their retirement.

So what kind of housing will they be looking for and where?

One major change we see is that these "Aging Boomers" aren't flocking to the Sunbelt areas like their parents did; they are choosing instead to move closer to their children, and more importantly, their grandchildren. This can often mean several residences, which are smaller and need much less maintenance.

A recent survey conducted by RCLCO (Robert Charles Lesser & Co. - an independent economic real estate advisory service firm with 40 years of experience) found that 75% of retiring Boomers said that they want to live in mixed-age and mixed-use communities in urban settings. Not all will want to move to urban cities, but walkable urbanized suburban town centers will start to see an influx of "Aging Boomers," as well. We'll see more of this movement as soon as the "Aging Boomers" can sell their suburban homes.

We'll look at the younger Baby Boomers next week. Please find below an update to my article dated February 2nd.

UPDATE on the Anti-Flipping Rules as they relate to FHA lending. A couple of weeks ago, I wrote an article related to the waiver of these rules and how they related to investors. HUD just changed that policy again and as of February 1, 2010, the following conditions of the waiver now apply. Please see below:

1. All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction. Some ways that the lender can ensure that there is no inappropriate collusion or agreements between parties is to assess and determine the following:
1. The seller holds title to the property.
2. LLCs, Corporations, or Trusts that are serving as sellers were established and are operated in accordance with applicable state and federal law.
3. No pattern of previous flipping activity exists for the subject property, as evidenced by multiple title transfers within a 12 month time frame.
4. The property was marketed openly and fairly, via MLS, auction, FSBO or developer marketing.
2. In cases in which the sales price of the property is 20 percent or more over and above the seller's acquisition cost, the waiver will only apply if the lender:
1. Justifies the increase in value by retaining in the loan file supporting documentation and/or a second appraisal which verifies that the seller has completed sufficient legitimate renovation, repair, and rehabilitation work on the subject property to substantiate the increase in value or, in cases where no such work is performed, the appraiser provides appropriate explanation of the increase in property value since the prior title transfer, and
2. Orders a property inspection and provides the inspection report to the purchaser before closing. The lender may charge the borrower for this inspection. The use of FHA-approved inspectors or 203(k) consultants is not required (see the policy for all the particulars).

Great Fortune,

- Diana Hill

DISCLAIMER:
This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results.

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