How Boomers Retiring will impact Future Housing Market
The first of the baby boomers –those born after World War II through 1964 –turn 65 this year. Having helped fuel new housing construction, mostly of suburban-sized homes, during their retirement years they are becoming larger-home sellers instead of buyers. At the same time, the number of new homebuyers is relatively smaller. This combination - downsizing boomers and a smaller group of new homebuyers – means fewer new suburban-lot homes will be needed in the county in the next two decades.
Aging boomers and other demographic and housing trends are addressed in a draft CARPC white paper, “Households and Housing Trends: Implications for Future Urban Development in Dane County, Wisconsin.” Among the findings:
- The number of households in Dane County headed by someone 65 or older will more than double from 2010 to 2030. Some 40,340 new elderly households will join the 32,000 households already headed by elderly persons –an increase more than twice as large as that in all other age groups combined.
- Over the next two decades an estimated quarter of the new elderly boomer homeowners and an additional one out of eight existing elderly owners will downsize from suburban-sized single-family homes to smaller lot homes, townhomes and multi-unit buildings. This will put some 9,800 suburban-lot homes on the market.
- The potential market for these suburban-sized homes will come from new home-buyers, 15 to 64 (mostly under 34). By 2030, these new homeowners will total 25,800. If past trends continue, some 71% of the new owners (estimated at 18,300) will choose suburban-lot homes. Factoring in a vacancy rate (3%) and replacement of existing units (1% per decade), the supply needed to meet this demand in the county will be approximately 19,200 units. Elderly downsizers will provide about 51% of the projected demand. The remaining 49% (about 9,400) new suburban-lot home buyers will need new construction.
Gauging by the last 20 years during which some 29,000 homes were built on suburban-sized lots, this rate of new suburban-lot construction would create three times the amount needed to satisfy the future demand for larger lot construction.
Other factors seem to reinforce trends toward smaller homes:
- Families are choosing to have fewer children. In 1950, 75% of U.S. households were married-couple families, and about 50% of all households had children under age 18. By 2009, married couples comprised less than half (49%) of households, and those with children comprised only 21%.
- More people are choosing to live alone or with non-family members. In 1950, 89% of households were families. By 2000, this portion fell to 68%. During this period, households with three or more people fell from 63% to 41%, and households with 1 or 2 people increased from 37% to 58%.
- Younger homebuyers are showing preferences for more urban housing and locations. According to surveys, Generation Y (aged 10 to 29 in 2010) prefers smaller home and lot sizes, within walking distance of shops and amenities, and served by transit. – Steve Steinhoff, CARPC staff
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