Baby Boomers Are Rejecting The Traditional Retiree Migration
The Baby Boomer generation will be the wealthiest generation ever to retire in American history. With most of the boomers now hitting retirement age, there is a massive amount of capital that is sitting in their pockets waiting to be spent. Over the next few years, they will continue to reshape markets to their tastes, and one of the largest markets they’re going to effect is real estate.
Baby Boomers were the generation of the suburbs. Born between 1946 and 1964, they were the first generation to grow up within the suburban developments that became so popular directly after World War II. They grew up with their family in the suburbs, migrated to the city for their career, and then moved back to the suburbs when they were ready to start families of their own. Now, the boomers are retiring and have to consider whether or not maintaining their large suburban homes will be worth the hassle as they reach their golden years. Rather than moving to retirement communities, boomers are now beginning to buy up property within urban areas again, returning to the city. This makes sense, as cities are unintentionally perfectly designed for retirees. There’s no yard maintenance, no snow shoveling, abundant public transport, and ease of access to almost any amenity that would be needed. Cities are now the hot destination for retirees to move to thanks to their compact, centrally located assets.
Numbers Don’t Lie
Between July 2013 and June 2014, only 11% of buyers between the ages of 50 and 59 closed on homes that were within urban areas in cities. The 2015 National Association of Realtors report showed that that number had moved from 11% to 13%. If this trend continues to grow, that would put nearly 1 in 5 Baby Boomers as buying property within urban cities in less than a decade. Only 2% a year seems like a small number, but there are nearly 75 million boomers, which means that a 2% increase is actually 1.5 million more boomers buying urban property every year.
The Wealthiest Generation
Boomers are estimated to have collectively earned $3.7 trillion, which is over double the $1.6 trillion in assets that the generation before the accumulated. Between their massive size, their higher work rates, and their higher education, the boomers are sitting on a massive amount of capital for their retirement. As they retire and stream into multifamily communities, developers have begun building massive complexes to take advantage of this, capitalizing on the cash flow that is going to be going towards real estate as the boomers downsize from their suburban homes. Over the next decade, Baby Boomers will again continue to define markets with their spending.