Baby Boomers Change Retirement – and Housing

by CJ Yeoman, Writer/Editor

The passage of Baby Boomers through American society has effected huge changes in attitudes toward women’s equality in the workplace, sexuality and parenthood. And now as they have started reaching the age of 65, boomers are redefining retirement and how to handle it.

And this is creating a HUGE opportunity for real estate professionals. How will you take advantage of it?

Busting out

Our friends at the KCM Blog say “Baby Boomers [are] About to Bust Out of Homes,” detailing the positive aspects of the booming numbers of these seniors who will be deciding where to spend their retirement years.

Of course, there’s the reality they may be forced to continue working because they have either lost value in their retirement nest eggs or they have not saved like they should have. But we’re talking here about those who are now deciding how they will be housed when they retire.

According to a recent study from the Center for Housing Policy (quoted by KCM), the homeownership rate exceeds 80 percent for those aged 65 to 84, and the typical homeowner has an average of $150,000 in home equity. Even those with a mortgage have an average of $93,000 in equity – so the ability to sell their home is not impacted by negative equity.

The Bipartisan Policy Commission says people over 65 “release much more housing than they absorb,” such as when they move in with their children, move into independent living facilities or nursing homes, or pass away.

“Between 2000 and 2010, people who began the decade aged 55 and over released over 10.5 million housing units (net). Most of these releases involve owner-occupied dwellings ….”

So as seniors are getting ready to make these decisions, will they have qualified real estate professionals to assist them?

Retirement assumptions going by the wayside

Tom Kelly of Inman News writes frequently on second-home purchases and says seniors will play a key role in the housing recovery. He figures nearly 5 million seniors are expected to buy and/or sell property in the next three years. With many of them boasting a “ton of equity,” seniors plan on buying their next home with cash, negating the effects of today’s horribly strict mortgage underwriting.

How many? Try 94 percent, according to the Market Enhancement Group, a Southern California real-estate research team.

The other surprise finding is that in 2010, only 1.6 percent of retirees between the ages of 55 and 65 moved across state lines. Florida is no longer the retirement haven it once was … and maybe no one state will take its place. Kelly says, “More retirees are opting to stay near where they once worked, moving out of the pricey real estate metro areas to places an hour or two outside of the city, where real estate prices and taxes tend to be cheaper.”

Also, boomers are not as willing to give up the cultural amenities they find in larger cities – or the better health-care providers. And why move far away from children and grandchildren you will need as a support system in later years?