How Baby Boomers Will Affect Housing

|

The Washington Post
By: Sarah Halzack
August 19, 2013

Although baby boomers make up 26 percent of the population in the Washington area, a new study has found that they make up 47 percent of the region's homeowners, a situation that suggests this aging generation has an outsize influence over the path forward for the local housing market.

Their choices - whether they stay in their current residences or become part of a nascent trend of retirees and empty-nesters opting for smaller digs inside the Capital Beltway - could have broader ripple effects for the Washington area economy.

David Versel, a senior research associate at the Center for Regional Analysis at George Mason University who conducted the study, weighed possible outcomes for the region, depending on whether boomers stay put or relocate.

If many boomers decide to leave their longtime homes, Versel said it could "scramble the whole housing market."

"You have all this inventory that's going to turn over for the first time in a generation, and nobody knows if there's sufficient demand to fill that inventory," Versel said.

The Washington area has seen an influx of millennial-generation residents in the past decade, but most have flocked to the region's urban core instead of its suburbs. And, even if they were attracted to a home outside the city, they might not be able to afford one.

Whether boomers hang onto their homes could also have implications for the kinds of businesses that thrive in each neighborhood.

"I think this changes the retail markets in and around those concentrations," said Stephen S. Fuller, the George Mason economist who directs the Center for Regional Analysis.

For example, Fuller said, this aging generation might have different recreation and entertainment preferences, and it might want different items stocked on the shelves of the nearest grocery store or pharmacy.

If boomers largely remain in their longtime homes, Versel said, local jurisdictions with the largest concentrations of boomers could feel pressure to provide more government services for aging residents, such as transportation assistance for those who do not drive.

Such efforts could be costly for local governments, many of which are still regaining their footing after experiencing budget shortfalls during the recession.

The impact of boomers' homeownership patterns could take shape in different ways across various jurisdictions. With 50.1 percent of its homeowners in the 45-to-64 age bracket, Fairfax County had a larger share of boomer homeowners than any other local jurisdiction. Montgomery County, with 49.1 percent, was not far behind.

"If you look at when Fairfax and Montgomery were built out, it was sort of when boomers were in the sweet spot of the household formation phase," Versel said.

But Loudoun County was built up much later, a fact that is evident in its lower rate of boomer homeownership: 42.3 percent.

The region's lowest-level area of boomer homeownership, 39.9 percent, was in the District, where a smaller share of the housing inventory consists of large-lot, single-family homes.

http://www.washingtonpost.com/business/capitalbusiness/how-baby-boomer-homeownership-trends-could-affect-the-local-economy/2013/08/18/5c95bb3c-04f5-11e3-88d6-d5795fab4637_story.html

About this Entry

This page contains a single entry by CFED published on August 19, 2013 3:16 PM.

We Can Close the Gap Between the American Dream and Reality was the previous entry in this blog.

Why Low Rates Haven't Helped The Housing Market More is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.