Response to Baby Boomers Buying in Urban Core
- Mar 03, 2015
When referring to the Great Generation and older Baby Boomers, the reliance on historical data—and 2000-2010 is historical—needs to be weighed with the reality of what is happening in certain urban core cities like San Francisco, since the recession ended.
It is akin to determining where your Apple stock is trading today by analyzing data from 2000-2010. In addition, one must keep in mind that those turning 65 years of age 10 or 15 years ago are now 75 and 80 respectively.
Many urban cores have gained a momentum since the recession. Two trends have grown hand-in-hand:
Pre-recession, not many buyers of condos were in their 20s. Now they account for a very large portion of buyers. Baby Boomers are fueling these purchasers by assisting their children.
The second trend relates to Baby Boomers. Ten to 15 years ago, Baby Boomers waited for their children to be in their mid to late 20s before purchasing a home in San Francisco. Often they sold the family home.
The sea change is that younger Baby Boomers have now been purchasing a home in San Francisco when their eldest child is a senior in high school. The parents realize the main reason they purchased the home was for the better public school system. It is now time for the parents to be back where they lived in their 20s and 30s. In addition, many commute to San Francisco, and now they want a place stay or to enjoy the vibrant social life the city offers. A condo with a great view is exceedingly important to them. They want to know where they are by looking out the window and taking a big bite out of the city.
The family suburban home becomes more of a vacation home. Often, if a child has moved back into the nest, they stay wherever the parent is not staying that day or weekend.
These Baby Boomer buyers specifically state that they do not want their children staying with them for more than a weekend or a week. Thus, they’re not looking for more and more bedrooms. They want larger living rooms and master bedrooms, but not more bedrooms. These Baby Boomers account for a much smaller percentage of buyers than the Millennials in a condominium building.
However, they are buying the best, largest and most expensive units. The revenues from these sales account for a disproportionate amount, and play an outsized role in the profitability of the development. Chances are the preponderance of penthouses or top floor units will be purchased by Baby Boomers. The other buyer group will be either single males in the technology industry or Baby Boomer parents buying for their children. We’re actively designing units in buildings that are geared toward a wide swath of age groups. In these best units, design elements are key.
Lastly, in luxury condominium buildings, a segment of the buyers are what we call Last Time Buyers. They may be in their 60s or 70s. They’re thinking that this may be the last place that they’ll live. These buildings, offering a la carte concierge services, coupled with the urban core walking lifestyle, enable them to live the rest of their lives in their homes. Whether with taxis or Uber, they no longer find that they’re using their cars. Over time, they may purchase the adjacent unit to enable them to have a live-in caregiver.
The urban core, especially in cities like San Francisco, has become a magnet for all age groups, including those over 55 years of age. How many people that you know in their 50s are attracted to “Senior Living 55+ Communities”?
Alan P. Mark is pesident and founding partner of The Mark Company, a leading urban residential marketing and sales firm. An industry leader, innovator and entrepreneur, Mark recognized the need for a creative, strategically focused, full-service real estate consulting firm that would partner with developers to bring urban residential projects to fruition.