As Boomers Age, Markets Will Slow Down
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Aging baby boomers in suburban markets will stagnate these markets in the coming years according to a report issued by the Mortgage Bankers Association. The reason why, when people turn 50 they tend to move less. By slowing down the velocity of the market, there will be less opportunities to buy and motivation for young families to come in.
“Baby boomers are moving into age groups where they’ll be much less mobile,” said Michael Fratantoni, a senior economist at the Mortgage Bankers Association. “With that aging-in-place phenomenon, portions of the country that are not used to having large senior populations will gray very quickly.”
According to the study, homeowners are less likely to move after they reach 50. About 27 percent of the people age 25 through 30 move in a given year. By contrast, fewer than 10 percent of those 50 and above move at all, and fewer than 5 percent move to a different state.
Those baby boomers who will move in the coming decades, Fratantoni said, are likely to be the most affluent and educated.
Those who remain, he added, will have lower incomes and less education. “So there’s likely to be a greater demand on services,” he said.
The effect will be felt most keenly between 2010 and 2030; by 2030 the whole baby boom generation will be older than 65. via the Austin Stateman
Anecdotally, when my wife and I first married, we moved into a community that was graying quickly, much along the lines of the article describes. While we loved our neighbors, they were all like favorite aunts and uncles, we craved living in a community with people our own age, issues, and concerns. When we moved to a neighborhood that had these characteristics, we were, and are, in heaven.
The additional tax burden for the younger families in communities that gray too quickly are fierce. Seniors typically consume more public resources, and as a community grays the politicians are quick to garner votes with increased senior benefits. The younger families then have to pick up the slack and pay a higher tax burden for the opportunity to live in that community.
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Comment by Jim Davis on 7 January 2007:
I disagree. My experience as a real estate agent in Arizona and Washington tells me that Boomers are willing to move as part of a lifestyle change when they retire. I have sold property to Boomers relocating to:
Get out of the congestion of the city and own acreage to have horses or enjoy their toys.
Move out of the CC&R controlled neighborhood so they can park their RV in the driveway if they wish.
Move closer to their kids and grandkids so they can be part of their lives.
Move to a warmer climate (nothing new here).
Move out of the big house with high taxes and a high maintenance yard to a condo where they can lock the front door and be gone for a month and not worry about the house.
The thought that Boomers that are mobile are all wealthy and highly educated is pure bunk. Boomers come from an ear when you worked for the same company for 20 to 30 years or more. The company retirement plan (sometimes for both husband and wife) plus the equity in their homes gives them many options for life in retirement. You don’t have to have to be a VP with an MBA to be able to live comfortably in retirement and enjoy a change in your lifestyle.
If my experience is typical of other real estate agents, then I believe Boomers will stimulate the market. Boomers will sell and move and those graying residential areas will start to become blond again.
Comment by Tom on 7 January 2007:
Great points Jim. I think there will be two levels of seniors. One group that is mobile, and the second that will stay put.
I grew up on Long Island where the convential wisdom is Florida, North Carolina, or stay.
I live now in Atlanta and odds are my peers will be much more mobile in their retirement years.
Excellent feedback t
Comment by drbrightside on 7 January 2007:
I absolutely disagree. As a person ages they are more apt to own their own home, this peaks around the age of 72. The front end of the baby boomers are about 10 years away from this, so we have that much time to worry about them starting this decline. A big untold story in politics is the not so coincidental statistic of the highest home ownership in U.S. history goes right along with the baby boomers aging, not vice versa.
Comment by Lars39 on 7 January 2007:
You can’t just look at Boomers. Immigrants are becomming a bigger factor in housing consumption. Immigrants tend to be younger and have children still at home. This growing demographic may well take up the slack in housing. We are seeing many immigrants, especially asian buying up housing at all price points here in Lincoln, Nebraska.