The iconic suburban, single-family American home isn’t going anywhere – and neither are their Baby Boomer owners. Contrary to common belief, the post-World War II generation will not be trading home ownership for renting, suburbs for cities, or yards and gardens for more maintenance-free living.
Rather, most Boomers will age-in-place, according to a new report by The Demand Institute. The generation will account for nearly one in every four dollars spent on housing in the next five years.
The report, Baby Boomers & Their Homes: On Their Own Terms – released by The Demand Institute, a non-advocacy, nonprofit think tank– doesn’t expect this generation to stick to the script when it comes to retirement and housing decisions. The research, which surveyed more than 4,000 Boomer households (ages 50-69), revealed that few Baby Boomers have intentions of downsizing or moving to warmer climates far from their families.
“During the financial crisis, Baby Boomers saw their wealth drop dramatically. While many have been forced to adapt their retirement and housing plans to new financial realities, they haven’t abandoned those plans entirely,” said Louise Keely, president of The Demand Institute. “For the most part, they are still retiring in their mid-sixties and staying in their homes. They value strong family relationships; they want to be near their children and grandchildren. Additionally, many Boomers maintain plans to upsize their homes.”
The next decade will see many Boomers taking on home remodeling projects, as they seek to update and increase the value of their homes. Nearly 40% surveyed plan for major home improvements in the next three years and could be taking out financing, like 203k loans, to do so. Yet, according to the report, most continue to prioritize style over the amenities necessary for aging, such as lower maintenance and accessibility features. Those who do move are not interested in exclusive elder communities, and if they are, they will stay close to their current homes.
“Thanks to a host of factors – not the least of which is the Great Recession– Boomers’ nest eggs have shrunk dramatically in recent years,” said Jeremy Burbank, vice president at The Demand Institute. “Financially, this generation is not necessarily ready for retirement, and half of their assets are tied up in their homes. Despite all of this, many boomers will look to finance their housing aspirations. Their choices will have real impact on the housing sector in the next several years.”
According to the report, Baby Boomers are carrying much more mortgage debt than earlier generations at this life stage. Even so, most of the generation who will purchase homes plan to use mortgage financing to do so, and in contrast to Millennials, the majority is confident in their ability to qualify for financing.
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