Time to Downsize? Not for Baby Boomers

July 07, 2014
Not ready to downsize

Thanks to a less than ideal market and more space, downsizing from their family home isn’t as popular for boomers as previously predicted. (Paul Bradbury, Getty Images / July 6, 2014)

The baby boomer who’s itching to ditch the responsibility of a single-family home and move into an apartment – now, there’s a relatively rare bird.

That may be something of a surprise, given the media reports and demographic prognostications that have painted an impression of a stampede of downsizing boomers into apartments, condos and town houses. But that’s just not happening — yet, according to Fannie Mae researcher Patrick Simmons.

In an edited interview, the director of strategic planning for Fannie Mae’s economics group said that though such a wholesale change probably is inevitable, boomers these days show little inclination to leave the single-family home lifestyle that, to an extent, has defined their generation:

Q: Isn’t there a general story line that boomers hit 65, become empty nesters, look around at the unused bedrooms that the kids once occupied in their houses, and announce that they’re paring down to a smaller space where somebody else will handle the maintenance?

A: Yes. There’s a perception, particularly in many media reports, that this massive generation born between 1946 and 1964 is altering its “housing consumption.” It’s true that they’re becoming empty nesters in droves.

But by one measure, the proportion of boomers who live in single-family homes actually increased between 2006 and 2012.

Q: Why aren’t we seeing the change that’s been predicted for so long?

A: There are a couple of things. One is their stated preference. One study from AARP, for example, asked boomers, would you prefer to stay in your house? Nine out of 10 said they wanted to stay in their current homes as long as possible.

And they’re just not moving. In general, their mobility rates have gone down, and a lot of that could be economic. During the housing downturn, the value of a single-family home owned by a boomer dropped by an average of 13 percent.

They lost about $1trillion worth of their single-family homes’ values. The market isn’t back to normal, and they could be underwater, waiting to recoup more of their houses’ value before they sell.

Also, they may be holding on to mortgage interest rates that are dirt cheap, and they’re saying, “I don’t want to let that go.”

Q: Couldn’t there be some movement from their traditional single-family homes to smaller single-family homes?

They’re downsizing, but staying in single-families — that’s not getting noted in the data?

A: Yes, that’s the thing. Take my own parents, for instance. Both of them retired, and once they were no longer tied to a job location, they chose to downsize but move to a lower-cost area and stay in a single-family house. They like yardwork, and they like the privacy of a single-family home.

But the big thing for them was the housing cost — they traded a single-family detached home in the expensive Northeast for a cheaper one in the South.

Q: Even if they’re the legendary “my generation is different” boomers and seem to think they’re going to cheat old age, can they hold out forever as single-family homeowners?

A: Eventually, boomers will slow down with age and have the same physical frailties that their predecessors had. My sense is that it’s not going to be a major shift, something we see in the numbers in a year.

It will likely unfold over a decade or more.

That’s not to say the shift to multifamily living isn’t happening in some places.

Small changes in housing behavior can have a significant impact on smaller segments of the market.

In some areas, the stories of boomers downsizing might be playing out in significant numbers.

Washington, for example, has a vibrant downtown housing market and close-in suburbs, and the opportunities for trading down into that apartment lifestyle there are different than in other parts of the country.

This story originally appeared on ChicagoTribune.com on July 6, 2014.

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