As the Baby Boomer generation grows older and enter those "empty-nester" years, many are swapping out their long-tome homes to enter the rental market.
A small percentage of Boomers are expected to convert from owning to renting in their empty-nest years, a report John Burns by Jeff Kottmeier said.
The 55 and older population is often overlooked—especially when the spotlight has been on millennials for so long—but they are a large part of the housing market.
The National Association of Home Builders (NAHB) and American Community Survey data found that over 48 million households in the U.S. are headed by someone who is 55 or older, accounting for about 42 percent of all households.
Senior households have been rising slowly over the decades, but this is about to change in the coming years. Urban Institute’s analysis of housing trends determined that senior households are expected to grow dramatically by 2030.
The Institute found in 1990, there were 20 million households for seniors ages 65 and up. In 2010, this number had reached 25.8 million, and by 2030, the institute projects that aging baby boomer households will reach 46 million.
“This dramatic growth will occur among both senior homeowners and renters, Urban Institute said. “Our research suggests that from 2010 to 2030, senior homeowners will increase from 20 million to almost 34 million, and senior renters—who include both homeowners who will shift to renting and baby boomers who already rent—will increase from 5.8 million to 12.2 million
The John Burns report determined the following about the relationship between renters and Boomers:
- In many metros, older renters have been driving demand.
- These renters rent by choice. They prefer an urban or suburban mixed-use location that provides convenient access to retail, dining, and cultural amenities.
- Mature renters prefer smaller, more intimate developments (~180 to 220 units) over large apartment complexes.
- Although 55 percent of newly developed apartments are studio/one-bedrooms units, there is significant demand for larger three-bedroom units, often appealing to boomers. A number of our developer clients wish they had planned a larger mix of 3+ bedroom units in their developments.
- Contrary to history, three-bedroom units are now often renting for more per square foot than two-bedroom units.
"As architects, developers, and investors plan for new communities, consider designing rental communities in locations that cater to the growing demand of boomers," Kottmeier wrote. "To be clear, we are not forecasting the end of homeownership. We just expect a continued increase in the number of boomers who rent."