Lots of Questions Surround Baby Boomer Housing Market - With a group as large as the Baby Boomers, it’s natural to assume that they’re going to have to play a role in the nation’s housing market recovery. But just how large of a role is something that is still to be determined! That’s because – when it comes to the Baby Boomers – there are plenty of questions and not so many answers. According to the National Association of Home Builders (NAHB), the Baby Boomers are going to play a huge role in home buying in 2013. In fact, they’re projecting that the demand for new 55+ housing is going to be so great this year that 22% more of those new homes are going to be built in 2013. And, they say, the demand is going to keep up in 2014 – so much so that new 55+ home construction is going to increase by another 20% next year.
What’s the reasoning for this prediction?
The NAHB didn’t pull these numbers out of thin air! Instead, they spoke to builders and developers who say they have seen an increase in interest from the Baby Boomer crowd. According to those builders and developers, Baby Boomers are starting to have an easier time selling their current homes, so they’re looking to make a move. However, the NAHB’s predictions contradict the findings of a recent study done by Harvard University. According to the Joint Center for Housing Studies at Harvard University, Baby Boomers are actually leading the way when it comes to home renovations – because they want to stay in the homes they’re currently living in. According to Harvard’s research, 55+ homeowners made up less than one-third of home renovations ten years ago. Today, though, 55+ homeowners account for 45% of all home renovation projects. And, over the next ten years, the “Echo Boomers” (the generation right behind the Baby Boomers) is predicted to spend over $12 million on home renovations. Harvard’s researchers say all of this is proof that aging homeowners want to spend their golden years in a place that’s familiar to them – with some age-appropriate changes – rather than pick up and move.
So, what do Baby Boomers really want?
They want to do what’s best for their financial future. After all, Baby Boomers took a major hit during the Great Recession. Many of them were forced into early retirement, and even the Baby Boomers that were able to keep their jobs lost money. For example, in the 55-64 age group, the average household income dropped 6% during the recession – making it much tougher for them to save for retirement. And, the Baby Boomers who lost money in the stock market (like in 401K’s, for example) didn’t have enough time to recoup their losses before it came time to retire. As a result, many Baby Boomers signed up for early Social Security benefits (at age 62, instead of 65). However, that means they’ll receive lower monthly payments for the rest of their lives.
So, when it comes to their biggest asset – their home – Baby Boomers aren’t willing to take another hit by selling in a down market. If they live in a market where they can afford to sell their existing homes without taking a loss, they might be convinced to do it. But in some places, that’s still not feasible. So, instead of waiting for the market to make mini-gains, they’re planning for the long haul – and preparing to stay put in a newly-renovated home, rather than picking up and moving. Some experts say the future of the housing market depends on the decision Baby Boomers make, simply because they make up such a large chunk of the population. So, it will be interesting to see how all of these questions get answered!
This article is brought to you exclusively by RealtyPin.com