A social relocation is about to take place across America as baby boomers–those individuals born between 1946 and 1964–move from their traditional homes to retirement communities, condominiums and downsized residences. It is a very exhilarating time for sellers, buyers and Realtors as an immense population group make lifestyle changes that have yet to be experienced in the United States. This transition is a challenge and an opportunity for all, even those of Generation X.
Sellers
Unlike their parents–the generation that weathered the depression and was challenged by the events of WWII–many boomers have raised families in spacious, well-appointed homes that were designed to accommodate large families and to entertain friends and business associates. These homes often require high-maintenance costs.
Whereas their parents bought homes and stayed in them for a lifetime, boomers are movers. Boomers had (or have) careers that force them to move around the country–typically changing homes about every five to ten years. Additionally, the boomer generation was more likely to invest in their homes than passbook savings. Consequently, as home equity increased and as finances would allow they would sell the house and use its equity to move into a larger residence.
The boomer generation has also enjoyed the comforts of well-designed modern homes with many amenities. While their parents saved money by making do with the minimum conveniences, boomers spent on the comforts of a modern lifestyle and the security that it provides. They invested in things that made their homes more livable: air conditioning; multiple bedrooms; three, four, or even five bedrooms; a living room, dining room and a family room; laundry and mud rooms; an office or bonus room; multiple-car garages; and large decks or patios. These were homes built for their lifestyles, not their parents’.
Living in or near a city has become the norm for most Americans, providing employment, recreation, entertainment and shopping opportunities that often are not found in rural areas. However, city living can be expensive. Homes typically cost more in the city, as do all the services that a homeowner demands. Moreover, dealing with traffic and parking in large cities can be challenging for even the most veteran city dweller.
Buyers
There are now an estimated 80 million baby boomers in America, and over the next 18 years they will all reach the age that meant retirement for their parents. They will approach retirement in a much different way than their parents did, with distinctive ideas about money, work, family and lifestyle. Boomers, for example, are much less likely to choose retirement in the conventional sense of the word as the demands of our society change. The financial safety net that Social Security once provided is becoming quite tattered. Boomers may not have the large savings reserves that their parents did. There is also uncertainty for them in terms of 401(k) programs because many individuals do not have the investment prowess or dedication to money management that might otherwise guarantee them financial security in retirement. Furthermore, taxes are likely to increase as Congress searches for ways to solve the financial hurdles that have built up over the last 20 years and must be addressed in the near future.
In spite of this, baby boomers have been and will be a huge population of consumers by any estimate. Many of them have invested in the stock market, have done a reasonable job of saving, have invested in 401(k) programs and have built equity in their homes, property and land. This is not to be ignored by anyone with even the least bit of business acumen. The baby boomer transition presents numerous business opportunities, especially in the housing industry, which must offer the “gray hairs” a changed lifestyle. This new lifestyle must meet the boomers’ needs in terms of health, wealth, and happiness.
Movers
While the city can be a wonderful place to work and play, it is not going to be the place of choice to live for retirees. Baby boomer retirees will not be staying put when they finally “retire”. They are, after all, baby boomers, which is to say their needs and wants are different in terms of where they live, work and engage in recreation. The reality is that the baby boomer generation is likely not to retire in the classic sense of the word. Instead, they will opt for a new style of living, much different from that of their parents.
Many economists are forecasting that boomers will sell their homes to generation Xers and downsize their lifestyle. This will create a huge buying opportunity for those in search of their first or second home or more living space. It is expected that home prices could stabilize as more houses come on the market; this would create buying opportunities for those once priced out of the market by rising prices and a limited supply.
Rural communities are likely to see a surge in demand for retirement housing, services, eduction and culture as retirees look to these area for new lifestyle in boomer-friendly communities. While cities such as Seattle, Portland, San Francisco, Los Angeles, Phoenix and Las Vegas spawn retirees, rural communities throughout the United States, including those in the Mid-Columbia basin, may soon enjoy an influx of boomers. Rural areas that change to accommodate these “old rock ‘n’ rollers” will gain financial rewards in terms of increased tax revenues, ready consumers for local goods and services, and demand for homes, condominiums and retirement communities.
Consumers
While boomers may not have saved the way their parents did, they do have spending power. After living 30 years in the city and accumulating a great deal of home equity, these retirees have money to invest in their new lifestyle and residences.
Put in dollar terms, a boomer that bought a three bedroom 2,000 sq ft house in one of the bedrooms communities of Seattle or Portland in 1977 likely paid less than $50,000 for that home. Thirty years later that home has appreciated significantly as a result of inflation and urbanization. Today a similar house on the east side of Seattle or Bellevue sells in the range of $425,000.
Now consider a boomer who had upsized over the years to about a 3,500 sq ft home in Bellevue or Redmond to be closer to work at say, Microsoft. That home would now sell in the range of $950,000 to $1,100,000. When you do the math, you soon realize that boomers moving from the city have a reasonable amount of money to invest in their new rural community and lifestyle, even without much savings or investment income.
Downsized
There are lots of reasons or retirees to downsize. The most obvious is to reduce maintenance costs. Another obvious reason is to free themselves of the work of maintaining a large home and estate, which can then give them more time for recreation or hobbies.
One way many boomers downsize is by purchasing a condominium. Condominiums have the distinct advantage of having no yards to maintain or gardens to tend. They also offer a community lifestyle with easy access to neighborhoods and friends. New condominiums offer all the amenities one could possible want in a residence too, and usually provide excellent security. They are affordable to heat and cool. Built right, condominiums are quiet so that occupants have excellent privacy. Additionally, they are typically located within easy reach of shopping or are located near public transportation.
Boomers who look to the Mid-Columbia Valley for a lifestyle change will find that it promises exceptional living now and long into the future.
By Wil Byers — Mid-Columbian magazine