Baby Boomers Downsizing to Rentals
Growing up in South Florida, it seemed that everyone had grandparents living in a condominium here. Whether it was on the beach or on a golf course, we all spent time visiting each others’ grandparents and aunts and uncles at some condo building or community swimming in the big pool, playing in the elevators, sneaking on the golf course and playing gin rummy in the card room. When I went north to college, my northern friends all knew where I lived because they too visited their grandparents in condos from Miami to West Palm Beach. Even Seinfeld wrote about the condo life into his show, housing his parents in the fictional, but true to life, Boca Vista del Mar Phase IV.
But Baby Boomers may not be following in their parents’ footsteps. The Greatest Generation believed in home ownership and holding onto that piece of property, even though down sized, until the end. They had to have something to pass on to their children. As Boomers are retiring however, a new trend is emerging. More often, Boomers are renting apartments. A recent study released by Fannie Mae shows that of an estimated 6,000,000 homeowners who expect to move by 2020, 5,000,000 expect to rent. According to axiometrics.com, the number of people aged 55-74 has grown by 3.2% annually over the last 10 years while the number of renters in that age group has grown by 4.8% annually.
Of course, Boomers continue to own property, including their family homes and they do downsize to condominiums, like their patents before them. But why are so many opting to rent? Their reasons include:
- Cost/Cost Savings
- Don’t want to sell when older
- Better use of money; allows for other investment opportunities
Certainly, many of the factors could apply to condominiums. So it appears that Boomers are looking to be more flexible and have fewer responsibilities in their retirement years. With that, urban areas such as New York and Chicago have seen some of the largest influx of Boomer renters. Rental properties that perhaps were originally designed and marketed with Millennials in mind also attract Boomers. 24-hour concierge service, pet parks, high end exercise facilities, gourmet kitchen and walking access to the urban center are key features attracting both Boomers and Millennials. And Boomers are often willing to spend more and will look for even higher quality apartments and amenities. Developers are all to willing to provide these features.
South Florida is still churning out luxury condominiums, particularly along the coast. However the buyers for these properties are primarily foreign investors or part time users. They are not the snow birds and retirees that still inhabit the plus-55 communities, golf course condos and low rise buildings. Apartment buildings, some which were originally designed to be condominiums but failed during the housing crash in the late 2010’s as well as projects specifically designed for multi-family rentals, have been going up from Coral Gables to Fort Lauderdale and Palm Beach County. Initially, it seemed as if these units would all be occupied by students and recent graduates. But more and more, an older clientele are moving into these urban units having recently sold their homes in the suburbs. Restaurants and businesses in the urban core are filling up with a mix of old and young.
South Florida might be just behind the curve with Boomers in rentals as compared to some larger cities, but if we are, we aren’t too far behind. The price of new condominium units is staggering and local buyers have not and will not be targeted for those units. The option for downtown and beach front living for retiring Boomers in our community will be rental apartments for the foreseeable future. When the next study is conducted, South Florida could be at the top of the list.