Last week, we talked about what Millennials are looking for in a home, but now it’s time to look at Baby Boomers and see if their needs are changing. This group spans two decades, from 1946 to 1964, with the oldest nearing 70, and the youngest just passing AARP’s 50-year threshold. More than one-third are single females.
The United States currently has a population of 76 million Baby Boomers, and they’re looking for a new home that’s easier to maintain, features quality construction and fits their lifestyle.
Many are empty nesters, have weathered the recession and are possibly retired, but are more active than earlier generations, meaning anything from involvement with grandchildren to sports to community participation is high on their list of what to look for with regards to location.
Many want to work after retirement, either by choice or necessity. The net worth of a typical baby boomer family is less than half of what it would have been if the financial crises had not intervened.
Still, over the next five years, boomers are expected to spend $1.9 trillion (or more) on home purchases. Approximately 40 percent will move, but a good number will not venture too far from their current address. Health, grandchildren, and finances matter most.
Location
Some Baby Boomers want to stay close to where they lived before. They might move to a new house, but they want to stay in a similar area rather than having to rebuild an entire network of friends, doctors, etc.
Diversity Matters
Many seek a lifestyle change and look for the resort lifestyle. For younger boomers, traditional retirement communities may not have the same appeal as master-planned communities do knowing they will be socially comfortable in a diverse neighborhood they expect to live in for a long time is important.
Residents love a variety of activities as well as the opportunity to interact and become friends with people of many ages. Overall, developers are investing more in clubhouses and community amenities that extend the living beyond the home and create ways for residents to interact.
Another catalyst to relocate is cost of living, which is why so many small towns appear on lists of places to retire. Often less expensive, college towns offer an eclectic mix of both activities and residents, so it’s no surprise places like Charlottesville, Oxford, Miss., or Athens, Ga., are beginning to pop up on the retirement horizon.
Fun in the Sun
In the last year, sales in the resort market increased by a record 57.4 percent. The National Association of Realtors Chief Economist Lawrence Yun attributes the hike to “baby boomers moving closer to retirement and buying second homes to convert into their primary home.”
Traditional warm weather locations still appeal. Even if retirement is a few years away, many plan to buy before prices go up further. Along the west coast of Florida, new demand is sparking construction in places such as once-sleepy Venice.
Luxury
Boomers typically are savvy Buyers with a good vision of what they want and need now and in the future. For some, this next purchase will be the home of their dreams. A newly built home offers floor plans and amenities aligned with anticipated lifestyles. Many will downsize square footage but upsize everything else.
Personalization and Low Maintenance
Low maintenance and having a home that will accommodate long-term needs are goals. Buyers want to bring their furniture, art and such along with them, but they are looking for a more efficient floor plan with large rooms and plenty of storage, single-level living or adding an elevator for when stairs become more difficult for them.
First-floor masters are only one way that builders are reaching out to boomers. Many are also adding high-end features such as wood floors, granite countertops, stainless steel appliances, walk-in showers and upgraded trim, multi-level countertops, raised dishwashers and lowered microwaves that make access easier for those with physical issues.
Resale value may not be a priority, but financial planners say it is an essential consideration. Boomers should keep resale in mind because there will be a time when they will want or need to sell or tap into the equity in that home. Schools still matter, too.
Homeowner Stats
(Updated November 2016)
The over-50 population is a growing force in America and the rate of home ownership is higher among this age group than in any other. Today’s seniors have more active lifestyles, are more affluent, and if they downsize their homes it is often in square footage rather than price.
2016 Home Ownership: Rates by Age
65+: 77.9%
55-64: 74.7%
45-54: 69.1%
35-44: 58.3%
< 35: 34.1%
Source: Homeownership Rates By Age (link is external), (U.S. Census Bureau, July 28, 2016).
Downsizing & Inventory
In Florida, they’re targeting Buyers who can afford large homes — but who are willing to accept much smaller spaces in retirement, provided the location is cool. It’s part of a Baby Boomer downsizing that’s becoming a niche industry.
While the majority of millennials and GenXers dream of living in bigger homes (unless they want to squeeze into micro units of 350 square feet or less), the 55-and-over-crowd is divided these days between those wanting more space and those wanting to downsize, studies show.
Baby Boomers are just as likely to buy a bigger home, and take out a mortgage in retirement to do so, as they are to downsize to a condo in Florida.
Questions about when and where boomers will retire — and what they will choose to buy —are on the minds of economists trying to predict what will happen to the housing markets.
Boomers are the second-largest group of homebuyers (31 percent) after millennials (35 percent). More than half the homes owned and occupied by boomers (53 percent) are between 1,400 and 2,600 square feet, with 12.5 percent measuring 2,600 square feet or more, according to Trulia.
The questions come as low inventory is stalling home buying across the country. A recent report out contends that America has a housing shortage. The number of starter homes on the market has dropped by 43.6 percent since 2012, while the number of trade-up homes has fallen by 41 percent, Trulia said.
At the same time, the median prices of so-called premium homes have distanced themselves further from middle-tier homes, the report shows, and now stand at $542,805 versus $267,845 for trade-up residences.
All this has potential ramifications for Boomers who are considering moving into a bigger and more expensive home in retirement.
“The more that price gap increases, the more difficult it will be for an existing trade-up homeowner to then move into a premium home,” said Ralph McLaughlin, the chief economist for Trulia. “And if that can’t happen, then it may be difficult for boomers to find buyers for their homes.”
