CAMBRIDGE, MA — Baby boomers, who have dominated housing trends at each stage of their lives – first as children in the households that fueled the great wave of suburbanization, then as young, first-time home buyers, and most recently as middle-aged households trading up to bigger and better homes – will once again heavily impact housing demand and home-related trends over the next decade.
That’s a conclusion of a major new report – The State of the Nation’s Housing 2011 – released by the Joint Center for Housing Studies at Harvard University.
According to the report, with household growth among young adults slowing, the aging of the baby boomers will dominate changes in the age distribution of households, as well as how builders and residential remodelers, including kitchen/bath specialists, need to approach the market.
Most baby boomers, currently approaching retirement age, “will choose to stay in their current homes or age in place, which may involve remodeling to make their living spaces more senior-friendly,” the Joint Center report states. Another group will downsize to smaller homes and/or move to single-level or elevator-accessed units, while some baby boomers will move to senior or age-restricted housing, including housing designed to accommodate, or provide services to address, age-related infirmities, the report adds.
Baby boomers will also be involved over the next decade in making housing decisions for their parents, the Joint Center observes.
While shrinking in size as mortality rates increase, the baby-boom generation far outnumbers its immediate elders and will therefore add dramatically to the senior population, boosting the number of senior households to unprecedented heights. Specifically, the number of households headed by homeowners between the ages of 55 and 74 is set to increase by 10.2 million from 2010 to 2020 (see related graph at right).
“As a result, demand for smaller homes should increase steadily as the baby boomers age,” the Joint Center report states. Since young first-time homebuyers also tend to purchase homes that are smaller and less expensive than average, ‘echo boomers’ will add to the demand for more modest housing as they replace the smaller baby-bust generation in the under-35 age range, researchers note.
Baby boomers may also reinforce the current trend toward the U.S. population shifting to the South and West, and toward metropolitan areas – although growth remains concentrated in the lowest-density counties of these areas, analysts say.
“When older households make longer-distance moves, they tend to relocate to areas with warmer climates and lower housing costs,” the Joint Center report notes.
Over the past decade, the leading edge of the baby-boom generation has shown no inclination to move back to cities; in fact, the share living in cities has decreased, representing a net loss of 343,000 households, while the share living in rural areas outside metro areas has increased, according to the Harvard report. Furthermore, with the majority of baby boomers living in suburbs and aging in place, the number of seniors living in suburban areas will grow by millions over the next two decades, the report adds.
“The pressure to add more services and amenities geared toward the elderly in these areas will no doubt increase,” the Joint Center report says.
Researchers caution, however, that baby boomers “have seldom behaved like their predecessors at comparable ages,” suggesting that “there are reasons to believe they will make somewhat different housing choices and perhaps on a different timetable.
“First, more baby boomers are expected to work at least part-time well past the typical retirement age, at least in part because their retirement savings and home equity eroded so greatly in the wake of the Great Recession,” the Joint Center report says. “In addition, many baby-boomer households have two earners, which may mean that more couples will retire in stages. And finally, both the baby boomers and their children are more likely to have had families later in life than previous generations.