Boomers and Millenials : Acting alike, to a point - by Daniel Calano

Daniel Calano, Prospectus, LLC

I have written a fair amount about demographic-housing trends, particularly for millennials and baby boomers, the two largest population groups ever formed in the U.S. They total almost 150 million people combined. Together, existing in the same time frame of about 15 years, they will have an enormous impact on real estate, specifically housing needs. Ironically, despite their age difference, some of their needs are similar.

To generalize and summarize, millennials dominate the huge growth in apartment construction, particularly in urban areas where they both choose to be and where the jobs are typically located. Currently, there is also a large part of the boomer generation who would like to move to urban areas, thus ramping up current demand for product owned or developed in the city by fortunate real estate investors. Later it is predicted, however, that millennials will leave many of those apartments in order to marry and raise families near excellent and accessible public schools typically more located in suburbs. Their buying trend seems to be somewhat predictable. This demand will certainly overlap with boomers still owning housing in the suburbs, thus potentially keeping upward pressure on those values. However, this is where the similarities end.

The trend for boomer retirees is less clear particularly because they are culturally independent and becoming free of many constraints that millennials will have over the next twenty years. Boomers, and I am one, have so many options and, to be glib, unfortunately less time, at least compared to millennials.

In doing the research on this, I hoped to find a somewhat clear boomer trend line that we real estate people could jump on, such as seems to be the case for millennials. Instead, I found a myriad of options often dependent upon complete freedom of choice, not constricted by rearing children, school selections, job commitments, or now even health care. Options for housing, include multi-family, co-housing, urban or manageable suburban, amenity oriented, life style center and so on. Essentially they like every style but the “old folks home” of yesteryear, or even over 55 (now updated to over 62) required housing. This is a group who can often do what they want and have lots of bucket list items left to pursue.

According to a survey last year by Wakefield Research, boomers would like to retire to most likely in the following environments: small towns (39%); retirement communities (27%); urban communities (26%); and (8%) for so-called lifestyle communities planned around amenities such as golf courses. As an added wrinkle, almost half of boomers think they might just stay in their current homes, and thus only slightly over half consider moving to options above. If they do move, it most likely won’t be very far from where they are. The vast majority (72%) plan to stay in the state where they currently live, since they want to stay close to friends and family.

For those who are staying put, around 70% are planning to update their homes to meet specific needs of retiring in place. This would include adding low maintenance house features, easier access, fewer chores, all the things you would imagine for simplified living.

A few take away issues you can count on are, boomers not succumbing to the inactive life of the convalescent type housing. They want a diversity of people around them, to remain engaged, to continue to be part of community albeit potentially new. It seems that, as real estate people, we can work in many different alternative areas to satisfy the needs of this multi-faceted generation, and sometimes meet millennial needs as well, taking out some of the supply side risk – a nice confluence of factors.

Daniel Calano, CRE, is the managing partner and principal of Prospectus, LLC, Cambridge, Mass.