When it comes to housing, baby boomers are different from many people in two important ways: They have more equity in their homes, and many are preparing to move.
If housing experts are right, boomers — the 77 million Americans ages 47 to 65 — soon may be a sweet spot in an otherwise sour market for new homes.
Homebuilders — caught in a slump that has slashed U.S. new homes sales in half since 2007 — have been slow to adjust. And the stock of existing homes in many regions is not exactly rich in the type of amenities boomers say they want.
A few builders are shifting to the senior market, but there’s not nearly enough construction planned to meet the pent-up demand, said Edsel Charles, a national and local housing researcher.
“Right now,” said Charles, of Tennessee-based MarketGraphics, “I think only about 60 percent [of boomers] will find what they want, and it should be much higher.”
So empty nesters like Bruce and Nancy Childs, who decided to downsize from a large home on an acre lot, had better be ready for a slog. The Childses started with a list of 220 houses — and ended up dismissing all but two before eventually buying in Noblesville, Ind.
“It was a madcap search,” said Bruce Childs, 64, “and they didn’t have a lot we were interested in.”
It’s a story that Charles, who has been researching new housing in more than 20 states, says will be told more and more frequently as early as next year.
The retirement market, experts say, appears ripe for change.
Having raised families, many baby boomers are ready to turn in the keys to their oversized suburban McMansions. Research suggests boomers are tired of climbing stairs and mowing lawns and will seek ranch-style homes along quieter blocks, with features that make life a little easier on achy backs and knees.
So far, however, boomers haven’t started moving in big numbers.
“They have hesitated because of the recession,” Charles said. “Once the government and the stock market settle down, and the [housing] market turns, you will find this bunch that has hesitated will become a pent-up demand.”
Boomers and retirees, he says, will be among the largest share of the market beginning as early as 2012.
If so, it could be a potent market.
Unlike the younger families targeted by most builders, boomers have been building equity for decades. They have paid down their mortgages over time, putting them in a better position to sell. Indiana University economist Willard Witte said boomers may be the first demographic to move when the market picks up. Charles agreed.
“I think we are heading into a huge retirement market,” he said.
What boomers want, however, appears to be in short supply.
Most boomers now favor ranch homes that are about 1,500 to 2,500 square feet, Charles’ research shows, selling for $140,000 to $230,000. Some prefer age-restricted communities, low-maintenance townhomes and downtown condominiums. The majority, his research shows, say they want single-story houses within neighborhoods that attract a broader mix of people — and are close to where they now live.
And they carry along a pretty specific checklist:
— Open spaces to host friends and family, rather than separate dining rooms, living rooms and kitchens.
— Features such as vanities and electrical sockets that are a bit higher off the ground than normal.
— Storage, especially his and hers master closets, plus structurally reinforced attics.
— Backyard living spaces — not swimming pools or outdoor kitchens, but large decks with fireplaces, hot tubs and wet bars.
Jimmy Dulin, a broker with RE/MAX, said boomers will buy existing homes within certain neighborhoods — but not houses that need work. And, just as the builders are learning, he said, don’t bother showing them a ranch surrounded by two-story homes with kids.
“They want a well-kept and well-maintained house,” he said. “They want to be around people like themselves, but not necessarily isolated.”
Today’s market is being dominated by first-time homebuyers, Charles said, and families ready for their first move up to a larger house. He encourages builders to look toward the future market but said that, to some extent, their hands are tied.
The economy has slowed home buying, and builders aren’t starting new neighborhoods as they did during the housing boom of a decade ago. That makes some builders hesitant to target a niche, such as boomers.
Originally posted at http://buffalonews.com
