How Boomers Are Reshaping Real Estate
N E W Y O R K, Dec. 12 -- When baby boomers think about retirement, they look around at their own homes, and they like what they see.
In surveys commissioned by the American Association of Retired Persons, both boomers and their parents say they aren't going anywhere.
"Consistently we find that 85 percent of respondents say they don't want to ever move; they want to stay right where they are," says Thomas Otwell, a spokesperson for the AARP, the lobbying group that represents half of the country's 77 million people over age 50.
Baby boomers, those born between 1946 and 1964, are just hitting membership age in the powerful senior lobby, and they're starting to make plans for retirement living.
This is not what real estate investors expected. The aging of America was supposed to yield a huge bonanza for assisted-living and nursing home companies.
The late 1990s saw a boom in new senior-housing construction, with 614 new properties built in 1998. By this year, as developers including Beverly Enterprises and Kindred Healthcare rethink their estimates of how many seniors want to move into this type of housing, just 150 properties are under construction, according to the American Seniors Housing Association (ASHA).
Growing Old, Independently
But even if boomers don't want to move right away, their rapid advance toward the ranks of the elderly is having a big effect on the real estate market. This enormous demographic group lays waste to trends whenever it reaches another age milestone. As the boomers make decisions about selling their homes, buying new and second homes, and moving into assisted-living and nursing care, developers and investors are waiting to see what they'll do.
The boomers' parents, who are getting older and frailer, vividly remember the Depression and have held onto their homes as long as possible. Some of them are now moving into nursing care and either selling their homes or giving them to their boomer children.
This will represent a $10 trillion wealth transfer over the next 18 years into the hands of the baby boomers, says David Schless, president of ASHA, a trade group representing builders of senior housing. What the boomers will inherit is a whopping chunk of home equity. Of adults older than 65, four in five own their homes outright, without a mortgage, Schless says.
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