Baby Boomers and Their Effect on the US Housing Market
If you used to watch Star Trek, Lassie, Land of the Lost, This is Your Life or Candid Camera – you’re probably a boomer.
If you remember Green Stamps, Lemon-up shampoo, red plaque-detecting tablets, Dixie® riddle cups, and daisy chains – you’re probably a boomer.
If you used to play with kaleidoscopes, G.I. Joe® with the Kung Fu grip, Mrs. Beasley, Lincoln Logs®, and super elastic bubble plastic – you’re probably a boomer.
And for over 30 years, you and your fellow boomers have dominated nearly every aspect of the US housing market.
Baby boomers are the over 76 million people who were born in the US between 1946 and 1964. This generation
first boosted the market when they grew up and started their own families, purchasing homes of their own. And now, years later, they’re back. In the last 5 years, older boomers have driven up the overall demand for housing.
The reason? Current homeownership patterns, as evidenced by recent Census Bureau surveys, are increasing with age. According to reports, homeownership rates peak at 84.5% for householders aged 70-74, and at 84% for those aged 65-69. Based on this data, aging boomers, the youngest of whom is 41 years old, will have a significant impact on the housing market for years to come.
Rising wealth in older boomers plays a key role in their impact on the US housing market. For the first time in history, older Americans are “moving up” when they retire, rather than scaling down. The average income for boomer families ages 55-64 is more than $60,000*, and their average net worth is over $500,000**
Another potential way the boomers will affect the housing market may come when they enter the 50-55 age bracket, as this is the age when people tend to become second-home owners. And between 1993 and 2003, the number of second homes has gone up by more than 100,000 per year, on average†.
Right now, boomers are in their peak earning years and many have a great deal of equity in their primary homes. They have the means – and the motivation – to purchase a second home, either as an investment or vacation/future-retirement property. Most boomers tend to purchase their vacation or retirement homes in the Sunbelt areas, or within 2 hours’ driving distance of their primary home.†† Another interesting trend seems to be the purchase of a second home that serves a dual purpose – as both an investment and housing solution while their son or daughter attends college.
Two-thirds of US housing was built before 1980‡, and boomers are ready for something bigger, better and newer. They want their vacation/retirement/second homes larger and more elaborate than their primary homes. Boomers want all the amenities – whole-house stereo systems, media rooms, in-home-offices, and large master suites. And with their younger self-perception and active lifestyles, they want access to walking/jogging trails, swimming pools and lakes.
Fueled by easy credit and low interest rates, baby boomers age 55 and older bought nearly a fifth of the 1.1 million new homes sold in the US in 2003‡‡. Amazingly enough, even as they get older and their households get smaller, the evidence seems to indicate baby boomers will continue to have a significant impact on the US housing market for the next 10 to 20 years.
® Dixie, G.I. Joe, Lincoln Logs, and Earth Shoes are registered trademarks of their respective owners. These companies are not affiliated with and do not endorse GetSmart or LendingTree, LLC.
*Source: Demographic Profile of American Baby Boomers produced by the MetLife Mature Market Institute.
**Source: Recent Changes in U.S. Family Finances: Results from the 1998 Survey of Consumer Finances, a study published in the January 2000 edition of the Federal Reserve Bulletin.
† Source: US Census Bureau
†† Source: Del Webb Baby Boomer Report Annual Opinion Survey: 2003 Survey Results Summary
‡ Source: US Census Bureau
‡‡ Source: The National Association of Home Builders
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