Real Estate for Retiring Baby Boomers

A recent survey of 55+ homebuyers by RCLCO analyzes this demographic

By GREGG LOGAN AND TODD LARUE

Baby Boomers are defined as those born between 1946 and 1964, which includes about 77 million Americans who remain among the best customers of builders and community developers. Unlike millennials, they have had time to accumulate substantial equity to invest in a new home. Their incomes are typically higher, and on average so are their credit scores. There are 45 million Baby Boomer households today, resulting in far more retirees than when Del Webb was creating the first Sun City Active Adult Communities (AACs) almost 60 years ago, which targeted an earlier generation of retirees. All Boomers will have reached age 65 by 2030; by then one in five U.S. residents will be of traditional retirement age.

Boomers are a large and diverse group, and not all of them are ready for retirement. Many Boomers will stay in the workforce longer for financial need or other reasons; about a third of boomers do not plan to retire before age 70 – or older. The homebuilder and community development industry is focused on the healthiest and most affluent quarter of the Boomer population that is most actively seeking new housing. Some are value-seeking retirees, while others are continuing to work full-time.

RCLCO recently surveyed 55+ households that were seeking to move in the next two years to understand why they want to move, where they want to live in terms of community setting and/or concept, and what type of community concept and housing product they are seeking. “Why” often means finding a new-home community that better suits their stage of life and the lifestyle they would like to pursue. Nearly a third of 55+ respondents to RCLCO’s survey indicated that they prefer a “suburban area with a mix of homes, shops, and businesses.”

The market for Boomer oriented real estate is strong, and will remain so for the next decade.

A majority of respondents to RCLCO’s survey said they would like a high-quality home in a peaceful and relaxing setting. Those 55+ were most likely to rank “facilitates living a healthy lifestyle by having walking trails, fitness center, etc.” among their top three considerations. Fitness centers, yoga studios, trainers, and fitness classes are top amenities. Households over age 55 ranked “arts and culture” the highest of all age groups, since concerts, food, wine and art events, and educational trips are all important activities to them.

RCLCO’s consumer survey indicates that a little over 30 percent of retiring boomers are considering relocating out of state, while others plan to move to a new neighborhood in their current area (about 24 percent).

When asked what type of housing product they are looking to purchase, most 55+ respondents to RCLCO’s consumer survey said they wanted a smaller, lower-maintenance, but higher-quality home than their current residence. Most respondents to RCLCO’s survey expressed a preference for a single-family detached home, though over 21 percent said they would consider a single-family attached home.

Not all are seeking out childless environments in their next home. The preference for age-restricted communities increases with age, as households seek opportunities to live a more social lifestyle with “birds of a feather” in new-home communities that facilitate meaningful social connections. The AAC market has increasingly become segmented to appeal to narrower buyer profiles within the larger Boomer audience. Successful communities vary in terms of concept (destination AAC, age-restricted enclave within an all-ages MPC, etc.), location (urban, suburban, resort), product (value, luxury, attached, detached), type and scale of amenities, total number of homes being offered, and affluence level of the consumers they are targeting.

The market for Boomer oriented real estate is strong, and will remain so for the next decade.

Gregg Logan is a Managing Director at RCLCO real estate advisors, leading the Orlando, Florida office. For more information, please visit www.rclco.com.

Todd LaRue is a Managing Director at RCLCO real estate advisors, leading the Austin, Texas office. For more information, please visit www.rclco.com.