Baby Boomers Chart New Direction in Housing
Economists are having a tough time figuring out what housing market moves baby boomers will make next. Americans over the age of 55 are veering from previous generations, opting not to retire but instead launching second or even third careers. They are shunning the traditional patterns of retirement and that could have a big impact on their housing choices, according to Freddie Mac’s latest Insight report focusing on the baby boomer generation.
Baby boomers are a critical piece to the housing market puzzle. Americans over the age of 55 make up a quarter of the population and control about two-thirds of the single-family home equity in the nation. Sixty-five-year olds who, on average purchased a home 35 years ago now tend to have a home value that is likely 3.7 times what they purchased it for.
Nearly a quarter of baby boomers recently surveyed by Freddie Mac say they need major renovations in their current home in order to stay there as they age. Many say they may face financial constraints to take on those remodels. For others who do plan to age in place, they may be underestimating the extent of the financial costs of outfitting their home with features so they can do so, says Sean Becketti, Freddie Mac’s chief economist.
As such, about 18 million home owners over the age of 55 may be shopping for another house in the next few years, according to the Insights Report.
The main reasons to move aren’t due to downsizing either. Instead, the survey showed the key influences making these generations move are: Affordability of the community, the need for retirement amenities, and a home with less maintenance.
Bottom line, the authors note, the 55-plus population likely is to be an active part of the housing economy for years to come still.
Source: “Boomers Ignoring Conventional Housing Wisdom,” Mortgage News Daily (July 19, 2016)