The Boomers are coming, and they’re set to make a significant impact on the real estate and housing market over the next two decades. Defined as people who were born between 1946 and 1964 during the post World War II economic and population boom and came of age in the socially and politically turbulent 1960s and 70s, the Baby Boomers number 76.4 million – a huge portion of the American population.
Long a driving force economically with unprecedented income, consumer spending, and home ownership rates , the Boomers are now easing into the silver years of their lives.
According to the Social Security Administration, 9,600 people a day will be blowing out their 65th birthday candles in 2015, up from only 7,800 in 2010, and continue at that rate for the next 20 years. In fact, if there are only 40 million seniors in the U.S. today, by 2050 there ranks will swell to 90 million. And with those nearly 10,000 new Boomers joining the ranks of senior citizenship every single day (buy stock in AARP!), there desire to reassess their finances as well as lifestyles will lead to big waves in the real estate market, too.
Here are 20 statistics about Baby Boomers and their real estate and housing – but it’s not always what you’d expect!
1. Baby Boomers – greatly vested in stocks, real estate, and other investments, definitely felt the sting of the economic downturn and Great Recession. Between 1991 and 2007, the number of Americans between the ages of 65 and 74 that filed for bankruptcy increased by 178%. That led Boomers to reassess their values and plans on issues like retirement, investing, paying off their home, and home ownership in general.
2. Even if Boomers haven’t shown a consensus that they’d like to sell, downsize, and relocate to senior communities in sunny climates, investors are going all in on that trend emerging soon by building senior communities in record numbers.
3. For instance, in Dallas, Atlanta and Chicago, the number of new assisted-living units under construction represent more than 10% of the existing inventory. That’s a run on senior housing, as by comparison, in the 31 other major markets, only 3.4% of new building was for assisted-living communities as of 2011.
4. Home ownership – one of the strongest pillars supporting the American Dream – was vastly important to Baby Boomers. In fact, thanks largely to Boomers prioritizing home ownership, U.S. rates hit an all-time high in 2004. Bucking the overall trend, homeownership in those 65-74 has actually only fallen by less than 3% (compared to almost 10% by those 35-44), and home ownership rates among seniors 75 and over have remained virtually unchanged.
5. Boomers lived by the fundamental premise that they should own their home and work to pay it off, living mortgage free in retirement. Thanks to decades of work and writing checks to their mortgage company, a Merrill Lynch survey reveals that the average homeowner 65 and older has accrued an average of more than $200,000 in equity on their residence. Many have their homes paid off completely, but far more saw those plans derailed by the recession and mortgage crisis.
6. The stereotype may be that Boomers are ready to retire and move to a state with a warm climate to enjoy their senior year as snowbirds. But in fact, 83% of new seniors who moved last year stayed in their same current state.
7. Merrill Lynch reports that only 48% of retirees surveyed live in a place with “pleasant climate/weather.”
8. Boomers are definitely looking to make changes, but it’s not ensured that they will sell their current home and downsize. Already labeled the “Downsize Surprise,” only about half of Boomers surveyed say they’re planning on downsizing.
9. In a startling revelation, about 30% of new seniors who have already moved actually bought bigger homes, reporting that they wanted room for family members or friends to visit.
10. And of those who are downsizing, 49% report doing so because they want a simpler lifestyle, while 28% are moving to a smaller home to save money.
11. So of the senior Boomers who are staying in their homes, surely they’re thinking about renovating their homes to make provisions for medical and aging concerns, right? Nope. Instead of adding bathroom bars, ramps, widening hallways, moving bedrooms to the first floor, etc., only 10% of Boomers say they’ve renovated or plan on doing so with future health concerns in mind.
12. In fact, out of retirees who have renovated, the most popular construction project was creating a home office! (35% of those surveyed.)
13. But surely the Boomers must be thinking about moving into senior communities, or at least living in neighborhoods with other seniors, right? Wrong again. Abouttwo-thirds (67%) of people 65 and older prefer neighbors of diverse ages and generations according to a recent survey, while only 53% of adults under 35 reported the same.
14. In fact, only 7% of today’s retirees go on to live in age-restricted (senior) communities. And the occupancy rate for assisted living communities (84%) is actually down a few clicks, not on the rise. In a recent survey by a national real estate company, 96.3% of real estate agents polled reported that they were currently working with Baby Boomers.
15. And 87% have Baby Boomer clients who already own, or are looking to purchase a rental property for investment purposes – a huge portion.
16. The number of people in the Baby Boomer generations turning 65 is so great that social historians (and marketers) are already breaking the demographic into two segments by age, Early Boomers (47-55) and Late Boomers (56-65). Research reveals that there are profound differences between those two segments when it comes to housing, home ownership, and future plans:
17. If and when Boomers do sell their existing home and move to a new locale, they have distinct priorities when selecting a neighborhood:66% say close proximity to healthcare facilities is important.34% say close proximity to parks and recreation is important.24% say close proximity to public transportation is important.11% say close proximity to a college or university is important.
Additionally, 66% say it’s important to be close to family…but it’s not the most important thing. Much to the chagrin of their adult children, 68% of Boomers confess that being close to great shops and restaurants is an important factor when relocating!
Among Early Boomers (47-55):
34% are interested in purchasing a second home.
52% are more likely to downsize than Late Boomers.
31% are selling their current home and looking for a larger home.
82% prefer a single-family home.
In contrast, among Late Boomers (56-65):
80% are interested in downsizing.
22% are interested in purchasing a second home.
47% want single-family homes.
27% prefer an active adult community.
18. In an unexpected twist, Boomers are forgoing their traditional ideas of home ownership and even households once they turn 65, getting creative with how they plan to spend their silver years – and where they plan on living. A large number of Boomers plan on utilizing creative housing solutions like condo conversions, boarding house conversions, co-housing, shared purchase of an apartment buildings and co-ownership/habitation of houses. As that comes to fruition, it’s reported that by 2024, there will be between 14 and 16 million new households formed in the U.S., many of them Boomers.
19. Boomers may be aging like fine wine, but they don’t want homes that are long in the tooth. While you might think that they opt for older-homes in established neighborhoods, Boomers who are buying or relocating actually desire modern appliances, energy efficient features, low-maintenance landscaping, open floor plans, spacious kitchens, and even modern technology! Though it’s interesting to note that single-story housing is still a priority.
20. Real estate analysts predict that a vast wave of Boomers selling their homes and moving into alternative housing units, whether that be assisted living communities, senior condos, etc. will create a huge influx of inventory, one that our current real estate market can’t necessarily absorb. While Millennials rival Boomers in number, they are in large opting not to buy and, saddled with debt, maybe cannot. Therefore, experts predict a huge swell of inventory in coming years that’s not absorbed or matching demand, creating downward pressure on prices in some markets.