Type to search

Commercial Real Estate

Boomers beginning to sell their homes but can millennials buy?

Avatar photo
Share

Boomer housing footprint is huge

By Kathy Canavan
Senior Staff Writer

Delaware baby boomers are beginning to pack up their single-family homes and move to smaller digs. Because there are 232,027 of them, their moves could tip the housing market.

The baby boomer generation, 76 million strong nationally, has a housing footprint so huge that if just one percent of them ditched their single-family manses for multi-family digs, it would represent an entire year of nationwide multi-family housing production, according to Patrick Simmons, director of strategic planning for Fannie Mae.

Boomers are sitting in a staggering 32 million single-family homes nationally.

Until the housing market picked up, Delaware’s older boomers had been aging in place in their Peter Pan homes ““ houses that work only until the inhabitant becomes infirm. In the past 18 months, boomers are slowly getting off the sidelines, and their housing stock is being passed to young buyers.

Boomer infographicIt’s starting off slow, said Steve Bomberger, president of Benchmark Builders in Wilmington and chairman of the National Association of Home Builders’ 50+ Housing Council: “So far they’ve been steadily moving. It’s not a rocket ship out of the basement. I call it a slow escalator ride. And that’s healthy.”

Bomberger characterized the housing market as “halfway back.” There’s pent-up demand all across the market, he said, whether it’s young first-time buyers or empty nesters looking for something smaller.

Millennials comprise the largest share of homebuyers at 31 percent, according to the National Association of Realtors. The next largest group of homebuyers is Generation X at 30 percent. Older boomers comprise 14 percent, and younger boomers comprise 16 percent. The World War Two generation is the smallest in the market at nine percent.

Citing a boomer preference to age in place, whether in a retrofitted ranch home or a 55+ community, Bomberger said boomer buyers are looking for something they can live in no matter what their circumstances as they age ““ one-floor living with accessory space for when family comes to visit and a neighborhood with shopping, medical, churches and recreation.

Sixty-four percent of boomers prefer single-floor living, according to the homebuilders association’s figures.

The housing transfer from generation to generation could have hiccups.

Simmons of Fannie Mae said the millennial generation, boosted by immigration, has the raw numbers to rival the baby boomers, but millennials may not have the financial resources to buy boomers’ homes while they are in their prime home-buying years, and they may not want houses in the same locations boomers chose. Millennials,
he said, want cities or walkable suburbs.

He questioned what’s going to happen when boomers start to sell homes at greater rates than they are buying them. “The leading-edge boomers are starting to get to when they become net sellers. The question is who is going to be there to purchase those homes? Are younger generations going to have the resources to buy the homes at the prices the boomers want to sell them at?” he said.

“Boomers living in single-family homes account for one-quarter of the nation’s entire occupied housing stock. What will happen if they move out and nobody moves in? Just small changes in what those boomers do could have  a major impact on the entire country.”

Millennials’ priorities in home-buying are affordability and convenience to jobs.

Boomers look for proximity to friends, family, shopping and health care services, according to the National Association of Realtors.

The transfer started in the second quarter of 2013 and revved up as housing prices have recovered to a point where many boomers feel they can get a fair price for their homes and move on, said Rose Quint , assistant vice president of survey research at the homebuilders association.

While they are beginning to move, often to homes that offer one-floor living, boomers are not necessarily looking for 55+ communities. The World War Two generation is ““ more than a quarter of them purchased a home in senior-related housing. Whatever the buyers’ generation, the homebuilders association projects the demand for 55+ housing will contribute to half of all multi-family starts this year.

Frank McKee of Mc Kee Group, developer of three 55+ developments in Delaware, said 2012 closings were up 81 percent over 2009 and he’s projecting a 54 percent bump this year. He credited the improving housing market that makes it possible for boomers to sell their family homes.

Bomberger said Delaware’s older buyers usually have equity from their existing homes and their credit scores historically are better than other buyers so they are able to get mortgages if they need them. He said they often want the same things in their last homes that they’ve gradually added to their family homes ““ granite countertops, tile bathrooms, hardwood floors, morning rooms, high-performance windows and energy-efficient heating and air-conditioning system.

“Cost is king in anything, whether it’s a car or a house or a piece of jewelry, but what we’ve learned is there are things that boomers want and they’re willing to buy them.

Get the free DBT email newsletter  

Follow the people, companies and issues that matter most to business in Delaware.

You Might also Like

Leave a Comment

Your email address will not be published. Required fields are marked *

Premier Digital Partners

© 2024 Delaware Business Times

Important notice for access to your Delaware Business Times “Insider” content

Flash Sale! Subscribe to Delaware Business Times and save 50%.

Limited time offer. New subscribers only.

Limited time offer. New subscribers only.

SUMMER FLASH SALE!

Subscribe to Delaware Business Times and save 50%