Get Used to Those Boomers and Xers

Freddie Mac Multifamily has published research results showing that older adults are showing less interest in buying a home. From an article in NAA’s Units:

Specifically, the spring profile finds a total of 67 percent of renters view renting as more affordable than owning a home, including 73 percent of Baby Boomers (aged 53-71). Similarly, 67 percent of renters who will continue renting say they will do so for financial reasons—up from 59 percent just two years ago.

The survey finds half (50 percent) of Baby Boomers currently renting do not anticipate buying a home in the future, up eight points from the previous profile taken six months ago. Of that half, 35 percent have no interest in owning, and 15 percent say they will never be able to afford it.

Similarly, 31 percent of Gen Xers (aged 38-52) expressed that sentiment, up from 28 percent from the previous Profile. Of those respondents, 19 percent lack interest and 12 percent say they will never be able to afford it.

“Perceptions of affordability and cost continue to play an outsized role in the choices of America’s renters, as they overwhelmingly see renting as more affordable and the right choice for them – right now,” said David Brickman, Executive Vice President and Head of Freddie Mac Multifamily.

“Remarkably, half of Baby Boomers who rent do not anticipate owning a home in the future, with a growing number of Generation Xers following suit. Indeed, we are witnessing an historic shift in preference among older Americans, as they increasingly are choosing the size, convenience and affordability that renting offers over ownership.”

This trend could have an interesting effect on the amenities that apartment communities provide in the future…Crossfit might be replaced by pickleball!

The Boomer Effect

There have been several large demographic trends that have positively affected the apartment industry over the last few years – a tight home lending market, more folks avoiding the anchor effect of mortgages so they can pursue job opportunities in other cities if necessary, the reluctance of young folks to commit to long term debt – but the wave of baby boomers who are downsizing might be one of the most significant trends in coming years. From an article at Property Management Insider:

In a report issued by the Federal Reserve Bank of Kansas City by economist Jordan Rappaport, “the longer term outlook is especially positive for multifamily construction, reflecting the aging of the baby boomers and an associated shift in demand from single-family to multifamily housing.”

He says that movement from single-family to multifamily housing could create a geographic shift from suburban living to city living, and that suburbs may need to consider rezoning alternatives to encourage multifamily reconstruction.

In a study last year, NMHC projected an increase in the number of older apartment renters. While most renters won’t fall into the Boomer category, those 65 and older will account for almost 60 percent of the increase in apartment renters by 2023. In the past 10 years, just more than half the increase came in the 45-54 and 55-64 age groups, the report says.

The younger demographic will continue to fuel demand for apartments, but don’t forget the Baby Boomers.

You really should read the whole article and see what else this trend might mean, particularly as it concerns amenities and apartment unit configurations.