How Grandpa Just Might Save Your Property Value
- Sep 06, 2007
As the residential market slows … and slows … and slows … we continue to hear reports of various cities and areas that are experiencing unusually solid housing sales.
But these neighborhoods aren’t the only sector showing housing growth. Other subsets of the population remain strong prospective buyers.
For example, first-time buyers will still, in some varying degree, take advantage of interest rates before they really rise, as they are predicted to do. Still, first-time buyers alone likely won’t move the market back into its previous robust state.
However, one category is poised to be a huge influence on the residential market in the coming few years — and it’s one that’s frequently forgotten. But as census research shows, that’s about to change.
Behold: The retiree. By 2026, the population of Americans ages 65 and older will double to 71.5 million, according to the American Association of Homes and Services for the Aging.
While some seniors will opt to stay in their current homes, many of today’s seniors are looking for active, exciting retirement options,
and they’re looking at housing that can support a lifestyle as much as
it can offer a place to live.
What impact will these Baby Boomers have on the housing market? Some points to consider:
New Phase of Life, New Neighborhood
Downsizing is an attractive option, which has led to the creation of dozens of senior "active living" communities across the nation, offering housing to those age 55 and older.
And that has positive implications for the residential construction community. Most senior homes are designed with older residents in mind — they’re typically one level, eliminating the need for stairs, feature open floor plans and a myriad of social and entertainment options within the complex.
Companies like Pulte Homes, which owns the
popular Del Webb brand, has built nearly 500,000 homes in the U.S. in
the past five decades. From Arizona to Arkansas, there are pre-built
communities being developed by a variety of companies offering reasonable housing, activities and
community centers that can include a pool, recreation center and other
And more retirement communities will likely be built as the Baby Boomer generation ages. About 19,000 people a day are turning 55, according to David Robertson, past board chairman of the American Association of Retirement Communities.
"And that is still a significant trend," he told the Star-Telegram. "We have not even begun to see even the crescendo yet."
Jim Rosenberg, a Myrtle Beach-area developer, told the Sun that his company is tracking the Boomers’ moves because, although the housing market is sagging now, when the oldest Boomers begin retiring in the next few years, they’re going to need somewhere to live. (And given that a recent National Association of Realtors study says 42 percent of them want to retire to the South, Rosenberg stands to do well if they follow through on that plan.)
Seniors Aren’t All Moving to Florida Anymore
Location plays a part in Boomers’ retirement plans. Travel is easier and less expensive than it was 30 years ago, and as a result, today’s retirees don’t feel compelled to retire in their current home — or in one location.
Many purchase retirement homes and second summer homes, spending part of the year at each. Some relocate to an entirely new place, looking for a change, confident they can travel often or easily relocate if it isn’t what they’d hoped. Some return to or for the first time opt to live in urban environments, due to their convenience factor and vibrant entertainment options.
AARP magazine covered the trend, publishing a list of the top five retirement cities.
"City living may cost a bit more, but urban communities also deliver peak value in the form of culture, work options, mass transit and fitness opportunities, and this year’s selections really cover the spectrum," Steve Slon, editor of AARP The Magazine, said.
AARP’s picks, selected for their smart growth, mixed-use nature, easy living standards and urban options like public transit, are:
- Atlanta: Selected for its volunteer and cultural options and range of housing types.
- Beacon Hill in Boston: Offering a plethora of history, Beacon Hill Village provides a service for older residents that will arrange transportation, healthcare and entertainment.
- Chandler, Ariz.: The dry heat climate and ample open space offers recreational opportunities for residents, and local activism offers social options.
- Milwaukee, Wis.: Seniors can utilize this Midwestern city’s lovely river walks and affordable waterfront housing.
- Portland, Ore.: Retirees who want to go green can likely find sustainable options in this eco-friendly city, which is home to many bike lanes and a redone downtown district.
But Before They Pack, They Need to Purchase
The vast amount of aging Boomers is great news for the housing market, but how much of an impact they will have — and when — still depends on a number of factors.
- For Sale … Still. While the construction industry stands to gain from the Boomers’ impending retirement and increase interest in retirement
communities, that’s contingent on them being able to sell their
And if the market stays lax, retirees may opt to
hold on to their home until sales improve, delaying entry into a
planned community — and delaying the need for new construction. That trend may have already started. Del Webb’s parent company, Pulte
Homes, as of June 30, had sold 1,771 homes in its Southeastern
retirement communities, excluding Florida — 225 fewer homes than it sold
in the first half of 2006, the State reported.
- Housing Supply Overload! In addition, residential mobility is going to be affected by the market. If the Boomer bunch moves into retirement homes and stays indefinitely, that’s likely to be felt in the market, which for years felt the influence of this large population group upgrading to more expensive homes and relocating to different cities.
And, considering many Boomers are at the top earning point of their career and have either bought more expensive homes over the years or stayed in one that has appreciated greatly due to market increases, Boomers moving into less expensive retirement homes will add a number of higher-end homes to th e market — which is already oversaturated.
Boomers have a myriad of choices facing them when they retire. Will they stay at home? Buy a new ranch house in a retirement community? Buy a condo in their favorite vacation spot?
And, although the real effects are a few years off, their decisions will undoubtedly influence the residential market. It’s too early to bank on any upswing — but it’s not too early to consider this group’s influence. One retiree isn’t going to alter the market; but the 19,000 people who turned 55 today? In 10 years — or less — they just might.