A survey of attitudes toward housing
released on Thursday by The Demand Institute indicates that the Baby Boom
generation still has no intention of aging gracefully. In fact, when it comes to housing it appears few
intend to yield at all to their advancing years.
The Institute, a nonprofit run by the Conference
Board and the Nielson ratings people, surveyed 4,000 households last year in
which residents qualified as members of that huge post-war generation born
between 1944 and 1963 about their future housing plans.
The survey found that as a group Baby
Boomers had a median net worth of $200,000 in 2007 and were on their way to
accumulate nearly $370,000 by 2013. Instead
the recession sent many off the rails and at the time of the survey that median
net worth was down to a median of $143,000. Although many Boomers have delayed or modified
their plans due to the recession they have, the Institute says, not abandoned
them entirely. Over the next five years
it is expected they will spend $1.9 trillion on new home purchases and $500
billion on rent.
Whether for financial reasons or by
choice the majority of the generation is still working but 58 percent plan to
retire within five years. Among younger
members, those 50 to 59 at the time of the survey, only 23 percent were retired
while 34 percent planned to be within that time frame. Sixty-nine percent of the older group, those
60 to 69 years of age, were already retired and 80 percent had plans.
Whatever their working plans, the survey
found that the generation has some counterintuitive plans for their
housing. Thirty-seven percent said they
plan on moving, but while the common wisdom has older folks downsizing as they
age, 46 percent of those who plan to change locations are looking for nicer
homes or more space. Nearly half plan to
spend as much or more money on housing after they move.
The Institute says the 46 percent of
those respondents who are looking for a larger home or plan to spend as much or
more as they currently do are less affluent than the respondents overall and
many delayed their housing plans because of the recession and its impact on
their finances. They have median net
worth of $40,000 and currently live in a home with a median of 1,200 square
feet. “Downsizers” on the other hand
live in a median 2,000 square foot home (compared to 1,600 for all respondents)
and have median net worth of $322,000.
“Upsizers are finally looking to
purchase their dream home,” the report says.
“Many in this group will move from renting to owning, but they are not
necessarily looking to spend lavishly – the median price of their next home will
be $180,000, less than the $200,000 of the more affluent “Downsizers.”
The “Downsizers” are either looking for
a smaller home or to spend less for a home similar in size as they own or
currently occupy. “Many are currently
living in larger, more expensive homes that will be difficult to maintain as they
age. But just because they are looking
for smaller homes, it doesn’t mean they are necessarily looking to settle. Many will seek homes with high-end finishes
and nearby services and amenities.”
Those who plan to move won’t go
far. Sixty-seven percent say they will
stay in the same state and a quarter plan to stay within 10 miles of their
current homes. The remaining third are
motivated as much by wanting to live closer to family as they are by a change
of scenery or climate. Maintaining
connections to friends and community is an important consideration and only
about 20 percent of those who will move are interested in residing in a senior
community or retirement setting.
Whether downsizing or not, most Baby
Boomers who plan to move will continue to live in single family homes and most
intend to buy. While slightly less than
half currently live in one-level homes one is an overwhelming choice for the
next home. Despite the maintenance, most
still want a house with a garden or yard.
The postwar generation is carrying much
more mortgage debt than did earlier generations at the same stage of life – a
median of $118,000. This is an increase of
142 percent since 1992 when the median was $48,743. But this is a generation that has never shied
away from debt and 56 percent of those who plan to purchase their next home said
they will seek a mortgage to do so. Seventy-seven
percent are confident they will qualify.
But back to those Baby Boomers who plan
to stay put. The Institute says that not
only do they prefer to age in place, they also feel their homes are set up to
allow them to do so. This despite the
fact that many lack “aging-friendly features.”
In addition, three quarters of those households surveyed have already
had a major health incident or have a member with a chronic health
condition. This, the report says, further
calls into question just how suitable these homes will be in the coming years.
These agers-in-place also show little
motivation to change the accommodative features of their homes. While 39 percent say they have plans to do a
major home improvement in the next three years, making the home more aging
friendly does not top their list of reasons for doing so.
The Institute asks if all Boomers are
making the most prudent housing decisions as they approach retirement. “Not necessarily,” they say. “Regardless, their decisions will have
important implications as this generation, once again, does it their way.”