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WASHINGTON, DC —
Baby Boomers will exhibit a diverse range of housing needs in the future, depending on their retirement time lines, and their preferences are certain to result in far different housing requirements and significant shifts from living patterns established by earlier generations.
That’s the key conclusion of a recent study whose findings hold important cues for both home builders and residential remodelers, including kitchen and bath specialists, since the 78 million Baby Boomers – Americans born between 1946 and 1964 – represent the largest generation in U.S. history and drive most major trends in the housing market.
The study, conducted by the National Association of Realtors (NAR), was based on a survey of nearly 2,000 Baby Boomers and was conducted for the Washington, DC-based NAR by Harris Interactive, a market research firm headquartered in Rochester, NY.
The study noted, among its other findings, that Baby Boomers are far different from previous generations because they are living longer, have no set path for retirement and have more varied circumstances in life.
“The differences from past generations – and between Baby Boomers themselves – will have a significant impact on housing needs over the next 10 to 20 years that is very different from the World War II generation,” said David Lereah, chief economist for the NAR.
“A significant portion of Baby Boomers married later in life and had children at a later age, which means many will continue to work beyond the traditional retirement age,” Lereah commented. “Older Boomers are thinking about retirement, but one-third expect to go back and forth between periods of work and periods of leisure, and another 35% want to work at least part-time or start a business.
“All of this will have an impact on the kind of homes they buy, as well as where they buy them.”
The median age at which Baby Boomers expect to stop working is 70, but 27% of those surveyed said they never intend to stop working, according to the NAR.
Slightly more than a quarter of the Baby Boomer generation is currently aged 55 to 60, which is when many people traditionally begin to focus on their retirement plans. However, analysis of the NAR survey suggests those people are more likely to stay in the workforce longer and will be less likely to downsize than previous generations, according to Lereah.
“The leading edge of the Boomer generation is the key to future housing impact,” he explained. “Because they’ll be in the workforce longer, Boomers will postpone purchase of retirement property and won’t be making those moves as early as assumed.”
Peter Francese, an independent demographic trends analyst, consulted on the NAR study. “For the vast majority of Baby Boomers, retirement is somewhere off in the future,” Francese observed. “Considering that Boomers are healthier than their predecessors, and are more likely to work in an office setting, many of them may work five or 10 years beyond the traditional retirement age of 65,” he added.
Given a longer tenure in the work force Baby Boomers may choose a larger home than earlier generations, Francese speculated. “Boomers may want or need a somewhat larger dwelling that includes one or two home offices, and a low-maintenance home on a single level would have broad appeal to this group,” he said.
Most Boomers live in two-income households, with a median income in 2005 of $64,700 – 31% higher than the median for all U.S. households. The generation makes up 37.5% of all U.S. households, but receives nearly half of all aggregate household income.
“This translates into a lot of purchasing power, and helps to explain why eight out of 10 Boomers are homeowners,” Lereah noted.
Francese said there’s little doubt that the vast majority of Baby Boomers will delay retirement. “Some will put off retirement because they have to, but many because they want to,” he said. “Many will have a larger income stream to purchase possibly two homes, which they may use to move back and forth between their retirement life and their working life.”
Forty-two percent of survey respondents would like to retire in the South, 32% in the West, 15% in the Midwest and 12% in the Northeast, according to the NAR findings.