Baby boomers were born between 1946 and 1964, and almost half of them bought their first homes between ages 25 and 34. A recent article in the Los Angeles Times explored the claim that these boomers are now "destroying the housing market" because they aren't selling homes the way they used to.
According to that report, about 67 million U.S. homeowners are older than 55 and own about 60% of all U.S. home equity. The vast majority (63%) plan to age in place. By 2030, boomers will represent 34% of the population. Many people in this age bracket (71%) who plan to move say they'll rent rather than buy. Complicating the situation is that cash-strapped millennials are often unable to buy the homes that boomers are selling, meaning that these homes may sit longer on the market.
Let's take a look at a few of these boomer trends in detail.
Selling Large and Buying Small
When boomers can sell their larger homes, they choose to live in houses that are easier and more affordable to maintain.
Unlike the populations that came before them, they don't want to live in traditional retirement communities. They want homes that are easy to maintain and within walking distance to restaurants and shops. Downsizing is a keyword for the boomer population. As their children move out and create lives of their own, parents no longer need extra bedrooms, bathrooms, play areas and expensive-to-maintain outdoor areas.
The downside of this trend is that many large and expensive homes will hit the market without enough buyers to move into them.
Moving to Urban Areas
Whether they are retiring or continuing to work, boomers are rejecting traditional retirement areas and choosing to move to vibrant urban communities where the cost of living is relatively affordable. According to an AARP study, quoted in The New York Times, the hottest boomer destinations are:
- Loveland/Fort Collins, Colorado
- Bellingham, Washington
- Raleigh/Durham/Chapel Hill, North Carolina
- Sarasota, Florida
- Fayetteville, Arkansas
- Charleston, South Carolina
- Asheville, North Carolina
- San Diego, California
- San Antonio, Texas
- Santa Fe, New Mexico
- Gainesville, Florida
- Iowa City, Iowa
- Portsmouth, New Hampshire
- Spokane, Washington
- Ashland, Oregon
Will the COVID-19 Pandemic Change These Trends?
Only time will tell, but close to 40% of boomers have decided not to move during the pandemic. Many are choosing instead to remodel their homes. In some situations, adult children and grandchildren are moving back in with their parents and grandparents.
However, the pandemic has accelerated the retirement rate, so many boomers may want to downsize at some point soon.
Implications for Brokers, Real Estate Agents and Investors
The over-abundance of big, expensive homes is a reality facing the market in the years ahead. Sellers will either need to be more flexible around their asking prices, or we'll see an emergence of communal living situations.
Developers will need to be in tune with the active boomer population's needs and wants, adding features such as home offices, first-floor bedrooms, outdoor relaxation spaces and storage. Diversity and nearby activities are also important to this population.
Although these demographic trends are a reality, brokers, agents and investors must still look at every buyer or renter as an individual. Making blanket assumptions about your market based on birth certificate dates can be short-sighted and discriminatory. Track the trends, ask questions, listen to clients' wants and needs, and do thorough research on your community's home values to stay on target with your goals.