Study: Housing Needs Changing for Baby Boomers
WASHINGTON D.C. — Baby boomers have a wide variety of housing needs in the future, depending on their retirement plans – or lack thereof – according to a study by the National Association of Realtors.
Most of the 78 million baby boomers are far from retirement, with diverse plans and timelines, resulting in different housing requirements and significant shifts from patterns established by earlier generations.
David Lereah, NAR’s chief economist, said baby boomers are living longer and are different from previous generations because they have no set path for retirement and have more varied circumstances in life.
“The differences from past generations – and between baby boomers themselves – will have a significant impact on housing needs over the next 10 to 20 years that is very different from the World War II generation, and many boomers simply don’t know how they’ll retire,” he said.
Lereah said most baby boomers are currently in the workforce, a good portion of them have children living at home, and boomers remain a driving force in the housing market.
“Because they will be in the workforce longer, boomers will postpone purchase of retirement property and won’t be making those moves as early as assumed,” he noted.
Forty-two percent of survey respondents would like to retire in the South, 32 percent in the West, 15 percent in the Midwest and 12 percent in the Northeast.
Most boomers live in two-income households, with a median income in 2005 of $64,700, which is 31 percent higher than the median for all households. This generation makes up 37.5 percent of U.S. households, but receives nearly half of all aggregate household income.
For baby boomers earning $100,000 or more, the study shows that more than nine in 10 are homeowners. Among middle-income boomer homeowners, home equity accounts for fully half of their net worth. Even so, 19 percent of respondents are renters, 37 percent say they have just enough to make ends meet and 17 percent say they are having financial difficulty.
A quarter of baby boomers own one or more other kinds of real estate in addition to a primary residence: 13 percent own land, eight percent own rental property, seven percent a vacation home or seasonally occupied property, two percent commercial real estate and three percent some other kind of real estate.
Four out of 10 respondents intend to convert their vacation home into a primary residence in retirement. Analysis by NAR shows baby boomers are proportionately more active in the second home market, owning 57 percent of all vacation/seasonal homes and 58 percent of rental property.
Ten percent of boomers indicate they plan to buy some form of real estate within the next year, which corresponds with U.S. Census Bureau data that shows 3.5 million boomer households moved during the last year. Two-thirds are considering a primary residence, but the rest are thinking about land, second homes or commercial property.
Almost one in four boomer households have a high net worth of $500,000 or more, and this ratio is expected to increase in the future as the generation ages. Virtually all high-net-worth households are homeowners (97 percent), and 47 percent are likely to also own other real estate in addition to their primary residence. More than a third expect to help children or grandchildren with a down payment on a home. Wealthier boomers want amenities where they retire, including cultural activities such as museums and art galleries. As a result, they are more likely to retire in an urban area or city.
The comprehensive study is based on a survey of nearly 2,000 American baby boomers born between 1946 and 1964 – the largest generation in U.S. history; the survey was conducted for NAR by Harris Interactive.