This is the third post in this series exploring the Baby Boomer generation’s retirement trend and its relation to real estate, from Boomer habits and goals, specifically focused on housing and money trends.
As mentioned in earlier posts, Boomers are continuing to buck the trend of moving to traditional retiree hotspots like Florida and Arizona. Boomers are opting to stay put, or very close to home and instead alter their homes to adapt to their changing lifestyles.
Aging in Place
According to the Demand Institute’s Study, 63% of Boomers don’t plan on moving in retirement.
While Boomers may be “aging in place” and willing to settle down closer to home, it doesn’t mean they aren’t going to contribute in a major way to the housing market in their retirement. It’s estimated that Boomers will spend $1.9 trillion in real estate and $500 billion on rent over the next five years. Putting that in more digestible terms, Boomers will account for almost $1 out of every $4 spent on home purchases and rent in the next five years.
Source: Demand Institute
Above all, Boomers are looking for low-maintenance houses, and for a lot of retirees, that means staying in place, and remodeling their current homes to fit their new lifestyle. This could mean one-story homes, or homes with elevators, but still with upscale appliances and amenities like hardwood floors and granite countertops. A lot of Boomers are attracted to condos and townhomes for similar reasons: luxury with low maintenance.
Retrofitting to Stay Put
10 years ago, Baby Boomers accounted for less than one-third of home-improvement spending, according to a Harvard-led study on housing trends. By 2011, Boomer home-improvement spending was up to 45% of the total market share. The biggest home improvement trends for Boomers are simple ones, but crucial in order to transition into the next stage of life:
Ability to Live on One Floor
Boomers are planning to stay in their homes long past the years when they want to be climbing up steep stairs to go to sleep. Putting a master bedroom and bath on the first floor is an easy solution to keeping your house elder-friendly, while leaving the upstairs bedrooms for guests. Not surprisingly, 40% of new homes built have master bedrooms on the first floor.
Wide Doorways and Hallways
A small space can be a huge difference maker for Boomers. According to one contractor, it’s not unusual for a $30,000 bathroom remodel, including a wider shower with a bench, higher toilets, and a grab bar.
Less work means less headaches for Boomers entering their retirement years. Lower cabinets, or even something as simple as cabinet pulls that are easier on arthritic hands, are all small fixes that make a big difference. There’s also a trend to replace big lawns with patios, making outdoor maintenance a breeze.
Doors and halls must be wide enough for walkers and wheelchairs.
Unlike generations past, where the trend was to save money, avoid debt later in life, and rely on traditional pensions and Social Security, Boomers are facing less stability and uncertainty, with more focus on individual investment and saving. While Boomers thrived financially in the 1990’s and early 2000’s, the 2008 financial crisis was a major setback for Boomers, causing most to refocus their retirement plans. Even with those setbacks, Boomers seem to live in less financial fear, with more of an open mind about retirement possibilities.
Not Afraid of Debt
Boomers are proving they aren’t afraid of taking on more debt in retirement, and some are willing to take on more debt in order to live in their “dream homes” or live a lifestyle that they always wanted in retirement. Americans 65 or older with mortgage debt was at 30% in 2011, compared to 22% in 2001. In the same time period, loan balances also increased, from $43,400 to $79,000.
Slowing Down? No Way!
One thing is clear – Boomers are showing no signs of slowing down in the housing market in the next decade. Buying, renting, and remodeling are all huge parts of their retirement plans.
Keep an eye out for Part 4 of this blog post, where we’ll discuss more Boomer Retirement trends.