The 55 and over population is not behaving the way it used to. Whereas the 55+ population in previous generations was retiring (or close to retirement) and moving t0 senior living communities, the 55+ population of today (the baby boomer generation) are living longer, retiring at later age, and are on the move.
Dave Lowman, EVP of Single-Family Business at Freddie Mac, called the 55+ age group “your next business opportunity.” What has grown to be the second-largest generation in history (approximately 67 million, currently) accounts for one-fourth of the population, but holds about two-thirds of the country’s housing wealth. Lowman said the decisions this age group makes “will have a significant impact on the demand for housing and mortgage credit.”
“Their numbers and their housing wealth guarantee that the housing decisions of older homeowners will play an outsized role in shaping the housing opportunities available to the generations that follow them—gen X and the massive millennial generation,” said Sean Becketti, Chief Economist with Freddie Mac. “And the influence of the 55+ population will last a long time (Exhibit 2). Today’s 65-year-old can expect to live until age 84 on average. In contrast, the life expectancy of the Greatest Generation—those born between 1900 and 1924—was 47 years. With a longer life span and ample wealth, many older homeowners may buy and sell several more homes before they’re done.”
Population data combined with results from a survey by GfK commissioned by Freddie Mac about the plans of 55+ homeowners revealed three things about that population: a large percentage of them plan to move, millions will be looking for financing options, and 55+ consumers are a financially confident generation.
Nearly 25 million of 55+ homeowners expect to move one more time, 9 million of them plan to move in the next four years, and 6.5 million of them plan to buy a house, according to Freddie Mac. The survey also showed that 20 million 55+ homeowners plan to either buy a house or finance age-in-renovations, which creates a significant market opportunity, Lowman said.
Many 55+ homeowners are still paying for their home and will be for some time—the survey found that out of 55+ homeowners who are retired, 36 percent of them have a mortgage. Out of those still working, 57 percent have a mortgage. According to Freddie Mac, a majority of those homeowners have 10 years or more left to pay. In addition, this generation has $8 trillion in housing equity and 51 million of them out of the 67 million (slightly more than three-quarters) say they are confident they will be financially comfortable in retirement.
“The bottom line: This is a sizable market,” Lowman said. “Even a relatively modest increase in lending to 55+ homeowners could add trillions of dollars in new originations in a relatively short time.”