Fayetteville Arkansas, University of Arkansas--Old Main Overview

Fayetteville Arkansas, University of Arkansas--Old Main Overview
Overview of Fayetteville, AR

Saturday, October 28, 2006

Baby Boomers Will Continue to Dominate the Housing Market for Many Years

It is probably no surprise that the housing needs of baby boomers are still a hot topic of conversation. The National Association of Realtors (NAR) gives a great deal of thought to this subject and performs studies and surveys to help forecast future needs.

The largest population group in U.S. history, the 78 million baby boomers are just now starting to reach early retirement age. Boomers have tremendous purchasing power. Most live in two-income households, with a median income in 2005 of $64,700. That is 31% higher than the median for all households. This generation makes up 37.5% of U.S. households, but receives nearly 50% of all aggregate household income, which helps to explain why 80% of boomers are homeowners.

One surprising fact did surface in the most recent comprehensive NAR survey: even with the statistics clearly showing financial resources greater than any generation before them, most survey respondents were unsure of their financial future. Seventy-five percent of respondents said they are not financially prepared for retirement and many even expressed anxiety about their ability to retire.

The retirement needs and wants of the boomer generation are as varied as the people themselves. Boomers are sometimes referred to as the “sandwich generation.” Many boomers married later in life than previous generations and therefore may still have children living at home. At the same time, it’s not unusual to find boomers with aging parents to care for.

One cannot simply assume baby boomers will address their retirement years in a pattern similar to older generations. NAR’s study surveyed nearly 2,000 baby boomers from all over the country with some likely results interspersed with a few that may not have been expected:

1. With life expectancy steadily increasing and retirement age for full Social Security benefits gradually increasing to age 67, many boomers are expected to work 5-10 years past age 65. Approximately 27% said they have no intention of ever retiring. Taking this into consideration, it appears they won’t be as interested in downsizing as the generations before them. Indeed, with today’s focus on technology, many people may prefer to have a home office or even two home offices.

2. When asked where they want to retire, 42% said in the South, 32% in the West, 15% in the Midwest and 12% in the Northeast. Consequently the Sunbelt continues to be a desirable destination for retirees.

3. Boomers have traditionally been active in the second home market, owning some 57% of all vacation homes. Forty percent currently plan to convert their vacation home into a primary residence in retirement.

4. The study also showed that 58% of rental properties are owned by baby boomers.

5. Ten percent of boomers indicated they plan to buy some form of real estate within the next year – many are considering a new primary residence, but the rest are thinking about land, second homes or commercial property.

6. Half of boomers who live in an urban area would like to retire in a small town or rural area, primarily because they believe doing so would result in a lower cost of living.

7. Other relocation considerations included being near family, availability of quality health care, and a better climate. Many also cited a desire to live near a body of water.

8. At the same time, more than a third of all baby boomers want to retire in an urban or suburban setting, motivated by quality health care and cultural activities.

9. When asked, half of baby boomers said they would consider living in an age-restricted community.

10. Women head up 20% of households. Their needs are usually different than traditional couples. Indeed, women frequently cited safety as their primary concern.

11. NAR President Thomas M. Stevens, said the survey shows most boomers want professional services when they buy real estate. Not only do they expect professional service and guidance from real estate agents, they place great value on those services. Mr. Stevens also stated “When buying a home, they want agents to represent their interests in the complex transaction process, and when selling they want help to establish the right asking price. Regardless of whether they’re buying or selling, boomers want agents to explain all of the complicated contracts, forms and agreements, to manage the closing process from start to finish, and to negotiate on their behalf.”

There is no doubt in my mind that baby boomers will have significant impact on all aspects of the real estate market for the next twenty years. This is the first time the U.S. has experienced a huge generation of affluent people nearing retirement age. Whether it’s a smaller home near their children and grandchildren or a place in the sun, boomers will be the driving force moving the market.

I stand ready to offer my professional assistance to anyone interested in buying or selling real estate in Northwest Arkansas. As a baby boomer myself, with similar attitudes found by the NAR survey, I can identify strongly with anyone looking for retirement property or a second home. Please call me at 479-966-0435 if you have any questions on this article or any other aspect of home ownership.

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To read a previous article on the effect of baby boomers on the second home market, scroll down to the bottom of my blog and click Archives for June. The article is titled “Baby Boomers Dominate 2nd Home Market” and is dated June 14, 2006.

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