Every eight seconds, another baby boomer turns 60. And as the trendsetters of the generation head for retirement, they're yearning for their dream homes.
Baby boomers have determined the course of the housing market for the last 30, 35 years. In the '70s, they were kids coming out of college. They weren't ready to buy a house, they rented apartments. There was this huge building boom in the rental apartment market.
In the late '70s and early '80s, they started to turn 30 and get married. They bought their first house, so you had a big wave of builders building relatively small, relatively inexpensive homes.
During the 1980s through about 2000, this population segment became older and more affluent, and started to buy bigger houses, termed by many as "McMansions." The trend of remodeling and buying second residences has reigned for the past 10 years.
This report helps determine what baby boomers will do next -- especially as housing markets cool and builders need to consider what models will be sellers that stand out among the increasing inventory.
"If you're a participant in the housing industry, you ignore baby boomers at your own peril because they are your primary market still."
10 Reasons Why Retirement for Baby Boomers Will Be Different
Looking around at what the industry is coming up with and what retirees are starting to do, here is what the editors of Topretirements see as key differences for baby boomers vs. their parents when it comes to retirement locations:
1. Baby boomers do not want to be labeled as old.
No baby boomer wants to admit he is over the hill. All one has to do is look in the early retirement chat rooms and message boards to see references to “geezer communities” - the “seniors” concept is a big negative for most baby boomers. Hence the drive by developers to find the perfect name for their developments – active seniors, active adults, 55+ communities, etc. Or perhaps not bother to give the name any connection at all to age. Instead, build boomers the facilities they want, give it the most romantic and adventurous name they can come up with, and then stand back and let the baby boomers move in, who will conveniently ignore that the development was built for people over 55.
2. More baby boomers will move farther away from where they live now.
Baby boomers have seen the world and most are not afraid of it. If they can find a place that promises more fun, more connections, and a richer environment than where they are now – they’re “out of here”.
3. More boomers will live in 2 places.
The economic resources are there for many of the post WWII generation. For these people, particularly for those who now live in the east and the midwest, living in 2 places allows them to maintain a connection with their current community, while enriching their life by spending the winter in a warmer place.
4. Baby boomers will take more chances and be a bit more adventurous than their parents.
This isn’t to say that there weren’t plenty of trailblazers among our parents. We’ve seen that it can be done, and this gives us permission to go on from where they left off. Boomers will probably move farther from home, live in more unconventional communities, and be willing to start over again if the first choice doesn’t work out.
5. The types of “retirement communities” are going to diversify
This idea relates to the point just made, today’s new retirees are going to be more adventurous. So as real estate developers try to anticipate what the hot concepts are going to be, they are going to have to get a lot more creative than the stereotypical concept of throwing up a clubhouse, installing a couple of shuffleboard courts, putting up a fancy gatehouse, and then calling it “Leisure Acres”. Instead, the amenities and lifestyle themes are going to become richer and more creative.
Waterfront and Golf communities are the current hot ticket for retirement communities, but they are very difficult and expensive to build. Eventually the developers will either run out of room or the people to buy into them. Baby boomers are going to revolt if they have no choice but a sterile gated community that is hermetically sealed from the rest of the world. So the trend towards more integrated communities that combine recreation, commerce, jobs, and culture will become more popular. The good news about the Texas Coast is that there is a lot of room for future development in all the coastal real estate markets, each with miles of undeveloped coastline and plans already in place to develop the kinds of communities baby boomers are looking for.
6. The types of retirement communities are going to get more specialized.
Just the past 2 years has seen many new types of communities coming on stream. In Boulder, Colorado the Silver Sage “co-housing” community is being built. This approach to community housing appeals to a certain segment who want to live more intensely with their neighbors, sharing occasional meals together in their community center, and even meditating together. Another idea is the new urbanism concept seen at Cinnamon Shore on Port Aransas and The Shores on South Padre Island, these self contained communities are like mini-towns with all the amenities in place to where you could live without ever leaving the community. See Cinnamon Shore Development
7. Small towns are going to reemerge.
There is a reason why small towns loom so large in our imaginations – they are a powerful ideal where everyone knows one another and shares a sense of community. Many boomers are going to seek out this ideal, looking for towns that are growing, have a vital downtown, plentiful recreational opportunities, and a charming appearance.
8. Cultural centers are going to be popular
One form of this is already taking off, with many universities across the country either participating in or permitting developers to build “university-affiliated” developments. These particularly appeal to alumni and former faculty who would like to live in their old college town. The college courses, atmosphere, and sports events that they can participate in provide a rich experience.
Another development idea that is going to be strong with baby boomers is the idea of communities that are built around culture. A good example of this is Rockport Texas. Rockport is a community where artists or would be artists can develop their arts amidst like minded neighbors. This trend has the support of many professionals who believe that creative engagement is vital to prolonging mental faculties. See Rockport Texas
9. Living in or near major cities will be more prevalent
A lot of baby boomers either never got to live in the big city, or they only lived in the suburbs. Cities are great for retirees – they are stimulating places, they’ve got public transportation, and something to do every second. Good examples of this can be seen on Galveston Island, which is only minutes from thriving Houston Texas and Port Aransas on Mustang Island, which is less than a two hour drive from market leading San Antonio-Austin Texas. See Galveston Texas
10. More baby boomers will work
True, hundreds of thousands if not millions of baby boomers have inexhaustible resources. But only 50% of today’s working adults believe they have enough money to live comfortably in retirement – either because their expectations are high (after all, they are baby boomers!), or because of the gradual disappearance of the defined benefit pension and concern about the viability of social security. An even more important reason why more boomers will work is because… they want to. A recent Gallup Poll found that 60% of those who said they had enough money to retire still expect to work in retirement. Most of the people who expect to work say they will be looking for part time work. And the key to working is to be living in a place where you can get a job – even if your choice of work is to volunteer.
This article is reprinted from http://www.topretirements.com/ with permission of the publisher
Boomer’s At A Glance
- Baby boomers make up, at approximately 78 million, the largest generational demographic in history.
- They are a diverse group, spanning 18 years (1946-1964), representing a broad spectrum of cultural, economic, psychosocial and global influences.
- Outnumbering the 50 million Gen Xers, over the next three years, the population of 45-64-year olds will have grown 30 percent, compared to the stagnant growth of 25- to 44-year olds.
- Even beyond the sheer size of the demographic, boomer households spend an additional $10,000 more every year on consumer goods and services than their younger cohorts.
- Boomers spend over $2.1 trillion/year of this unprecedented wealth on consumer goods and services including $79 billion on home improvements last year alone. They have $28 trillion in assets and control 67% of the nation’s wealth.
- 80% of boomers use computers, one third of them going on-line every day. Direct catalog marketers estimate that 70% of on-line purchases are made by women, the majority in the boomer demographic.
- They also represent 50% of car purchases and 74% of all prescription drug purchases.
- With more established careers than younger generations, many boomers are at the peak of their earning potential. What's more, eight out of ten boomers say they don't plan to retire.
- As a result, over the next seven years, there will be 80% growth of 60-69 year-olds, the leading edge of the boomer demographic, working full or part-time creating even more assets and wealth.
- Not only will they continue to earn income, but within the next decade, many boomers will be managing inheritance windfalls.
- 55% of boomers agree that they have no particular brand loyalties, with 68 percent of women over 35 saying that “the older they get, the more they enjoy trying new things.”
- As they age, boomers will be vocal about their needs and are on the verge of flexing their combined social, economic, and political muscle. They are a force with which non-profits, institutions, the government, politicians and society as a whole will both want to and have to reckon.
Baby boomers are not only the greatest market opportunity today, but a powerful force shaping the future of our society.
According to NAR, the number of sellers who were at least 45 years old or older in 2006 was 54 percent. This is the same percentage as for 2005. This means that baby boomer activity has remained consistent. Furthermore, the age at which people reach their peak spending is 46.5. The largest proportion of boomers was born in 1960; 2006 was the year this group should have hit its spending peak. This may partially account for why the market has been so strong for the last seven years, as the bulk of the boomers moved through their peak spending years. The current statistics also demonstrate that the prime time to purchase a second home is when the buyer is between the ages of 50 and 60. Currently, many boomers are purchasing second homes in the Sunbelt with the idea of trying out the lifestyle while they are still working. When they retire, they will sell their big family home and make their second home their primary residence.
Opportunity: According to NAR, approximately 17 percent of the boomers plan to purchase real estate in the near term. In 2007, look for the boomer market to continue to be strong, as those born in the late 1950s and the early 1960s purchase second homes in anticipation of retirement. Expect to see more of them selling their large family homes and trading for a property with better amenities and less maintenance. Planned Waterfront and Golf course communities should continue to be popular as senior communities that cater to affluent and active seniors who want minimal property maintenance.
The Texas Gulf Coast is particularly popular with baby boomers, especially from Texas, the Midwest, the East Coast, California and Florida. With property prices around half the price of comparable beachfront property from the east and west coasts, and with steady appreciation rates, the Texas Coast is the real estate market to purchase property for retirement, second home or investment for at least the next 10 years. See our article on why invest in the Texas Coast for more information.
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