On the House: A boomer boom goes bust
By Al Heavens
Inquirer Real Estate Columnist
A lot of home builders once assumed there would be a bottomless market of baby boomers for their over-55 communities.
You could see the dollar signs in their eyes every time they happened on one of the 79 million Americans born between 1945 and 1964.
Demographers admonished them not to lump all boomers together, noting that a large segment hadn't gone to Ivy League schools or become corporate lawyers.
Some, it turns out, actually worked for a living, or didn't, or lived from paycheck to paycheck, or saw their high-paying jobs outsourced to cheap labor markets and now were working at fast-food outlets.
When buyers didn't materialize fast enough, developments were built that boomers could retire into while they were still working, communing with their demographic in four-unit clusters or at community recreation centers. Then came 2006: The housing bubble burst, the poor got poorer, and the rich became less so.
Now, five years later, boomers are hanging on to their houses, either because they hope their lost equity will be recovered quickly or because buyers are scarce. That's what the 50+ Housing Council of the National Association of Home Builders and AARP found in separate surveys of baby boomers in late 2010.
Another finding: The recession has made buyers more practical about choosing new homes. Design considerations have taken a backseat to financial concerns, which any student of the obvious figured out three years ago.
Falling into the "no-kidding" category: Past surveys showed that selling a house facilitated the purchase of a new one. The most recent data indicate that option diminished during the economic downturn.
In 2005 and '07, the Home Builders/MetLife Mature Market Survey reported, no active-adult buyers acknowledged having to tap cash or savings to buy a house, but in 2009, 45 percent of the typical buyer's down payment came from cash or savings.
The data were drawn from the 2009 American Housing Survey conducted by the U.S. Department of Housing and Urban Development.
In a May Webinar, Margaret Wylde of the ProMatura Group of Oxford, Miss., who produced a number of the studies I've reported on over the years, said the number of boomers "very unlikely" to buy in active-adult developments had risen from 3 percent in 2004 to 31 percent.
Those able to buy are getting much more for less, the Home Builders/MetLife study said, with fewer than half reporting that their new houses cost more than their old ones.
AARP's study reported that 88 percent of those 65 and older and 83.5 percent of baby boomers want to stay in their homes as long as they can.
That means most boomers will stay where they are in the suburbs, AARP said: "Retirement communities are now being developed closer to metropolitan areas because many are still working and don't see retirement as withdrawing from society."
There were some interesting insights on urban areas, as well, from AARP:
Many central cities are experiencing a resurgence of urban living fueled not only by young adults but by empty-nesters.
"Yuppie senior" populations emerged in places like Las Vegas, Denver, Dallas, and Atlanta.
Slow-growing metropolitan areas in the Northeast and Midwest will age, too, but more likely will consist disproportionately of "mature seniors" who are less well off financially or medically. Those populations may require greater social support, along with affordable private and institutional housing, and accessible health-care providers.
On the House:
Inquirer real estate writer Alan J. Heavens is the author of "Remodeling on the Money" (Kaplan Publishing). His home improvement column appears Fridays in Home & Design.
"On the House" appears Sundays. Contact Alan J. Heavens at 215-854-2472, firstname.lastname@example.org or Twitter: @alheavens.
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