Many Baby Boomers and others who are older than 55 are planning to move into a rental unit in the near future, according to Freddie Mac’s 55+ Survey of housing plans of people born before 1961.
They survey is based on responses from almost 6,000 homeowners and renters born before 1961.
The results show that about 6 million homeowners, as well as the same number of renters, want to move again and rent. About 5 million of those expect to rent by the year 2020.
Of those who expect to rent their next home, about 79% of renters and 83% of homeowners say it will cost the same or less than what they are paying now, according to the survey.
“When a population this large expects to move into less expensive rental housing, we have to expect it will create significant new pressure on both the supply and cost of existing affordable rental housing,” said David Brickman, Freddie Mac Multifamily executive vice president.
In fact, more data is beginning to suggest that mortgages and homeownership may not be the American Dream as Baby Boomers begin moving into the apartments and urban areas.
As Baby Boomers plan to make their next move, these are the 4 things they will be looking closely at:
1. They plan to rent versus buy their next home
Of renters over 55 planing to move again, 71% said they will rent their next home. In fact, 59% say it makes financial sense for people their age to rent.
2. Top attractions include affordability and amenities
The top “very important” factors that influenced their next move included affordability at 60%, amenities needed for retirement at 47%, living in a community where they are no longer responsible for caring for the property at 44% and being in a walkable community at 43%.
3. They don’t want to move far
Of those planning to move again, about 31% of renters over 55 want to move to a different neighborhood in the same city, and 23% want to move to a different property in the same neighborhood. About 18% would like to move to a different city in the same state, and 24% would like to move to a different state.
4. They want family near (or in) their next home
In predicting their retirement situation, about 60% said they would prefer their family to live near or with them. Hispanic single-family renters were the most likely to predict they would move closer to family at 44%. Multifamily Asian-American renters were the most likely to say they will move in with their children at 40%.
As the Baby Boomers plan to move into lower priced markets, apartments and urban areas, they may even begin pushing the Millennial first-time homebuyers out of the market as it becomes more competitive.
Affordability continues to be an issue as 47% of the 55+ renters say they struggle from paycheck to paycheck, 13% sometime even unable to afford basic necessities until the next paycheck, according to the survey.
A. One of the sellers who moved out of state took a job in Toronto. The weekend we sold the house, the temperature in Toronto was 1 degree! I told the seller to hang onto my card!
B. Four properties sold were dual agency – we represented both buyer and seller. It sounds like a high wire act, but I am clear about my duty – I give advice based on what’s best for the person with whom I’m speaking with, and don’t disclose anything about the other party. When you can keep it clear in your head, it’s not a problem. None of them were ‘sold before processing’.
The commercial brokers do it all the time, and it’s likely enough to come to the residential side that keeping my dual-agency chops up will pay off someday.
C. Seven of the 24 sellers sold a house that I sold them. I can’t rely on past clients as my only sellers – people aren’t moving like they used to!
D. Two-thirds of the buyers expected to invest more than 10% of their purchase price into repairs and improvements. Fixers provide additional inventory, and I think we did a good job to adequately discount the price paid.
E. All of my listings were featured here at bubbleinfo.com, and my SP:LP ratio was 99%. Do the video tours and blog exposure help? They must!
F. A sign that the frenzy is over and the market is flattening out is the second negotiation – the request for repairs. None of them go down easy.
It’s interesting to see different takes on blogging about real estate. I try to keep our focus on local market data and opinions, but I could include more texture about our neighborhoods plus things to do. I’d like to have more Kayla videos too!
Do you have an opinion on what you’d like to see here?
The year-over-year improvement is the most remarkable stat – last year was great, yet the index keeps going higher!
“The home price increases reflect the low unemployment rate, low mortgage interest rates, and consumers’ generally positive outlook,” David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, said in a statement.
How is the Brexit going to impact the sales of real estate?
There’s no telling how long this “initial reaction” period will continue and what the longer term effects will be, but for now, the short term effects have been strongly positive for rates. The most prevalent conventional 30yr fixed quote is still 3.5% on top tier scenarios, but 3.375% gained a lot of ground today. With just a bit more improvement, the average lender would be at 3.375% for the first time since early 2013. This is also the lowest stably-maintained rate we’ve ever recorded (there were scattered instances of 3.25% back in 2012).
The Brexit will be great for mortgage rates, and we could – and should – see the lowest rates yet. The 10-year closed today at 1.4377%, and we add 1.75% to it to find the target for 30-year conforming rates (3.18%).
Lenders are like gasoline companies, and reduce their rate slowly on the way down. Hopefully, by the end of the week, we could see the 30-year mortgages being quoted around 3.25%!
But home buyers are concerned about overpaying, so lower rates will just keep them optimistic – they won’t make them want to pay more for a house!
There will be more turbulence, but never as a society have we had such teflon memories. We just swipe it all away!
Home sellers won’t be thinking much about Brexit – it’s too vague and far away.
What should concern sellers is the calendar – July starts on Friday! But it’s not because the market cools off in the second half of the year.
Last year, 51% of the NSDCC sales closed in the first half, and 49% closed in the second half. The median sales price is the first half was $1,127,500, and in the second half it was $1,070,000, which is close enough.
But doesn’t everyone believe that the ‘spring selling season’ is the time to sell?
Yes – the best buys sell first, leaving the picked-overs for the second half!
Click on the ‘Read More’ link below for the NSDCC active-inventory data: