The baby boomer generation is notorious for having a huge impact on the economy. At every milestone in their lives, their buying power has had a huge effect on market trends. As they collectively approach retirement age, their impact on the real estate market will be tremendous.
Baby boomers are defined as people born between the years of 1946 and 1964, and they represent nearly 78 million people in the United States today. While most of them are still years away from retirement, many are starting to think seriously about their plans for the future.
The National Association of Realtors (NAR) conducted a comprehensive survey of 2,000 baby boomers in 2006. Based on this study, NAR's chief economist David Lereah notes that baby boomers have very diverse retirement plans.
Lereah states, "A significant portion of baby boomers married later in life and had children at a later age, which means many will continue to work beyond the traditional retirement age. Older boomers may think about retirement, but one-third is expected to go back and forth between periods of work and periods of leisure. Another 35 percent intend to work at least part-time or start a business after reaching retirement age: all of this will impact the kind of homes they buy as well as where they buy them."
The study found that the median age at which boomers intend to retire is 70. The study also found that over a quarter of baby boomers do not intend to stop working at all. This means that they will still be a viable force in the housing market. Rather than moving into assisted living facilities as many expected, they intend to stay in their homes or seek out a property of equal or higher value. Because they intend to work longer than anticipated, they will continue to be a driving force in the real estate market for years to come.
While boomers by and large intend to delay their retirement, many have specific destinations in mind for their twilight years. Forty-two percent of people surveyed plan to head South to retire and 32 percent plan to head West. Areas like Florida and Arizona will see a huge influx of retirees when the baby boomer generation begins to leave the workforce.
Nearly nine in ten baby boomers with income over $100,000 annually are homeowners and about a quarter of them own other property besides their primary residences. Ten percent of baby boomers, or about 3.5 million people, intended to purchase real estate in the next year. Two-thirds of the ten percent intended to purchase primary homes; the rest were thinking about vacation homes, rental properties or land. NAR statistics show that baby boomers are very active in the second home market: owning 57 percent of all vacation homes as well as 58 percent of all rental properties.
As the prospect of retirement looms on their horizons, baby boomers will be key players in the real estate market. They may not retire as soon as some analysts had predicted, but when their mass exodus from the working world begins, the impact will be undeniable.
