Aging Population & Real Estate

Many boomers will retire “in-pace” while others will retire closer to family. The sunbelt migration of older retirees has seen a reversal over the past ten years. With the cost of health care for the elderly skyrocketing, new decisions on where to live, shop, work and play will be an important decision factor for finding a home but none are as important as family.

Assisted living facilities have waiting lists. The monthly costs are escalating every year. A simple one room apartment in an assisted living facility costs between $4,000 and $8,000 PER MONTH!

The large “active adult” community project will not be the panacea but a stepping stone in down-sizing. These communities will only be an acceptable choice if it is located close to a caring son or daughter.

During the 2000’s, families moved every four years. I believe the search for employment and the housing crisis will lengthen this period. Also, the children of baby boomers will not be moving as much. They are more locked into their home and employment and will not be taking risks. This generation is experiencing their first difficult recession and their outlook on the future will change. Add a retiring or elderly parent to the equation and their real estate goals change. Then add children to the equation and all of a sudden the length of stay in a home will be longer and longer. In the ‘80’s the average time for a family to relocate was every 7-years.

Again accepting a home as a place for family, faith and freedom, we will be less likely to move and this alone with change the dynamics of the housing industry. A home has never been about earning a profit on a financial investment.

Baby boomers will have a dramatic impact on the real estate industry. By retiring in place, new housing starts will be adjusted downward establishing a new norm. Paying of the mortgage will become common and the home value passed along to their heirs.

The ramifications would be that buyers will be faced with rising prices, rising interest rates and diminishing number of homes to choose from. In my opinion, a seller’s market has returned and will be with us for years to come.

The aging population will affect new home construction starts and thus the supply will be readjusted to a new norm. Family formations are down and generational houses may be the new trend – for years to come. New home designs will target the aging population by at least keeping the MBR on the main floor, minimum 3-BR’s for family visits and a 2-car garage. However, plenty of storage will be the key amenity in a home for the boomers.

 

The baby boomers will have a significant impact on the real estate industry.....if we listen!