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BABY BOOM GENERATION.
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Impact upon housing.... More...
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Paper Abstract:
Impact upon housing. Examines how boomers are driving selected real estate purchases. Home purchase choices including primary home for families, second or vacation home, retirement homes and communities in the future. Data on Baby Boomers. Their consumption patterns. Higher spending levels than previous generations. Uses Houston, Texas metropolitan area as an example.
Paper Introduction:
Baby Boomers and Real Estate Choices
Introduction
Members of the so-called “Baby Boomer” generation of Americans born in the first two decades following World War II are beginning to enter their retirement years, or to experience earnings peaks that foreshadow a prolonged capacity to spend at levels higher than any previous generation (Big spenders, 2001). Members of this particular generation appear, as this report will demonstrate, to have a proclivity for luxury purchases – including the purchase of second homes for vacation or recreational use or properties that are destined to serve as retirement homes; equally significantly, these consumers are attracted to water view or water front properties in the greater Houston, Texas, metropolitan area and on the national level as well. The rep
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It is likely that as Boomers age, their home purchase choices willchange. American Demographics, September 1, 3 -34.Bivens, R. (2 1). An emphasis on retirement communities offering assisted livingservices, smaller homes including condos and town homes with minimalmaintenance requirements, and multiple amenities are likely to predominatein this market segment. The Houston Chronicle, March 2, 1.Fitzgerald, K. These trends are apparentacross the United States. Members of this particular generation appear, asthis report will demonstrate, to have a proclivity for luxury purchases -including the purchase of second homes for vacation or recreational use orproperties that are destined to serve as retirement homes; equallysignificantly, these consumers are attracted to water view or water frontproperties in the greater Houston, Texas, metropolitan area and on thenational level as well. In the Houston, Texas, metropolitan area, an upsurge in developmentswith a "water feature" such as a lake or a bayou suitable for fishing orboating has been observed in recent years (Bivins, 2 3; Ongaro, 2 1).However, there are no data currently available in the literature whichindicate that Boomers in particular are selecting such sites or areas forretirement or vacation homes; indeed, Ongaro (2 1) suggested that Houston-area developments such as Harborwalk (formerly Flamingo isles) and HighlandBayou are appealing to buyers in all age cohorts who can afford waterfrontlife. Hotel & Motel Management, 213 (2 ), 4 -5.Ongaro, L. (2 ). However, most secondhome buyers purchase within 15 miles of "home base" rather than in distantareas, which are more appealing to buyers seeking a retirement rather thana vacation home (Razzi, 1997). (2 1). Vacation houses: Go for it. ReferencesBayou City: Make waterfront development Houston's next big thing. Boomers are certainly buying luxury properties in thesecommunities, but they are doing so not for retirement or vacationopportunities, but for primary homes that offer multiple amenities andshort commuting distances to business centers located more centrally(Bivens, 2 3). Long distance residential mobility & the baby boom. In Houston, demand forwaterfront property is being driven by home buyers in all age and incomecohorts and not solely or even primarily by Boomers - though Boomers doconstitute an important market segment, particularly with regard to upscaleand luxury properties in new gated communities and master-planneddevelopments.Conclusions This brief report has demonstrated that the Baby Boomers are drivingselected real estate purchases and developments in Houston and nationally.While many Boomers are buying second or vacation homes and others areseeking retirement homes, water front properties are in particularly highdemand. The Houston Chronicle (Bayou City..., 2 2) reported that waterfrontdevelopment is Houston's next "big thing." Developing waterfrontproperties is being undertaken to reverse economic decline, which is not aproblem impacting Houston at the present time. Boomers have been a major factor in the growth of the housing market.Longino (2 1) stated that Boomers are three times as likely to havepurchased two or more primary residences than their parents and somewhatmore likely to have invested in vacation or recreational real estate, oftenlocated near a golf course, a lake or beach, or other designated"recreational' community in a favorable climate. Advertising Age, 71, S8+.Longino, C. The demandfor such properties is sending developers into sectors that have beenoverlooked. According to Fitzgerald(2 ), Boomers are particularly interested in second home purchases (foruse during working years or after retirement) that are characterized by thepresence of multiple amenities that may include assisted living services aswell as activity areas (i.e., pools, lakes, tennis courts, golf courses,club houses). Baby boomers fuel growth of timeshare opportunities. Bivins (2 3) commented that in this area, a raging land market hasbeen evident for the past two to three years; especially appealing to homebuyers (most of whom are seeking either single family homes or largercondos and townhouses) are subdivisions or planned developments whichfeature boating and other water-based recreational opportunities. Houston developers are addressing multiple needs, including thoseof younger families for close schools and excellent transportation andthose of older buyers for amenities and luxury. The Houston Chronicle, July 26, 1.Razzi, E. Independently owned single family homes, condominiums, and town homesas well as apartments are among the choices available to Boomers; residencechoices vary according to the specific needs of the buyers, with no clear"winner" in any of these categories (Retirement prospects of..., 1999).Timeshares have also proven popular among Boomers, with water view/frontproperties of this type in high demand (Malley, 1998). (1997). (1998). The Houston Chronicle, September 27, 34.Big spenders. Bivens (2 3) also noted that master-planned communities such asthose located on or near Lake Houston, Fall Creek, and Eagle Springs areparticularly in demand among home buyers. Low interest rates are seen bythis analyst as paving the way for even first-time buyers to securedesirable water view properties in the lake-rich Houston area. Rapid pace of new subdivisions. (2 3). Kiplinger's Personal Finance Magazine, 51 (11), 113 - 115.Retirement prospects of Baby Boomers. Real Estate Issues, 25 (2), 42 - 44.Malley, M. New housing options abound. Family Economics And Nutrition Review, 12 (1), 56 - 59. On average,members of this generation have earned more and spent more than theirparents; some 74 million Boomers consume luxury automobiles, upscalehousing, costly vacations and leisure time accessories, clothing, and otherproducts at a dramatic rate. Further, as Longino (2 1) noted, manyBoomers are entering their retirement years with a substantial financial'cushion" that is likely to ensure that their spending continues intoretirement, though perhaps on a reduced scale. (2 ). Razzi (1997) alsoreported that consistently high income levels among Boomers, a (formerly)surging economy, and low mortgage rates are fueling purchases of vacation,second, and retirement properties in popular areas. F. Boomers seeking such real estate are typically viewed as attracted toSunbelt locations in Arizona, New Mexico, Texas, and other areas of theSouthwest as well as Florida (Fitzgerald, 2 ). Work to begin on former Flamingo Lakes development. The report will first identify the Baby Boomergeneration and their consumption patterns, moving to a brief overview ofreal estate sales patterns in the target area and the national scene.Discussion The Baby Boomers, born between 1946 and 1964, comprise a generation(or two generations) which has had a major impact upon housing and othermarkets since their entry into adulthood (Longino, 2 ). However, there is agrowing body of evidence suggesting that many Boomers are considering lessdramatic changes in residence, opting for planned retirement communitiesclose to their original homes and their children and also electing to moveto communities offering a wide range of assisted living services (i.e.,transportation, medical/nursing care, cafeterias/meal plans, and maidservice) (Fitzgerald, 2 ). Baby Boomers and Real Estate ChoicesIntroduction Members of the so-called "Baby Boomer" generation of Americans bornin the first two decades following World War II are beginning to entertheir retirement years, or to experience earnings peaks that foreshadow aprolonged capacity to spend at levels higher than any previous generation(Big spenders, 2 1). (2 2). (1999).
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