Where Will Boomer's Retire?
So Where Do Boomers Want to Retire/Live? Thanks to technology a
second home doesn't need to be just a weekend retreat, allowing
justification of higher priced second home purchases. Nicholas
Retsinas, director of the Joint Center for Housing Studies at
Harvard University, says "the rise of telecommuting has done
much to spur the growth of the second-home market. A day at the
beach, or at least the beach house, no longer precludes a full
day on the job." Traveling to the South of France, much less
South Florida, eats up too much valuable time. That's one reason
most second homes, today, are not in glamorous places, rather
they are in convenient ones. According to the NAR, the median
distance from first to second home is 185 miles from a major
metro area, or about a three-hour drive under normal road
conditions. "The most important thing to know is that baby
boomers are different, and even the most experienced developers
are still trying to figure them out," says Atlanta-based
consultant Pete Halter.
Empty nesters are selling their big homes in the suburbs and
buying a condo or townhouse in the city, and a detached home in
a resort destination. They downsize with quality in town and use
the resort home as summer camp to try to get the family back
together again." Attracting future grandkids appears to be
another theme. Developers are learning to build projects a short
drive away from the ski slopes, Halter says, so they can
increase their activity offering to include all seasons, not
just winter. "Right next to a ski run, there's not much going on
in July," he says. "But find a spot in a valley a few miles away
and you can build a family resort with golf, hiking, biking and
equestrian facilities that can be used at other times of the
year." Proximity to any natural amenity that offers boomers a
chance to hike, bike, canoe or kayak themselves to exhaustion is
a strategy. Boomers are so unpredictable, but we know they are
more active than any past generation.
Hot second-home demand. A quarter of households earning $125,000
a year want to buy a second home in the next two to three years,
says resort developer Centex Destination Properties. A survey
commissioned by the company found that: Sixty-three percent of
households earning at least $125,000 sought information on
second-home ownership in the previous 12 months $350,000 was the
average price respondents would pay for a single-family home;
$295,000 was the average for a condo or townhouse "I worry that
we're building too many golf courses. Boomers like to live on
golf courses. They like to look at them and they love the
appreciation rate of golf club real estate. But they're not
playing the game much. The numbers of really avid golfers are
actually declining. It requires too much time to play it well,
and it may be too sedentary for boomers" says Rich Sonntag, of
The Pivotal Group, a Phoenix, Ariz.-based developer of resort
communities. "Everything we do is aimed at the aesthetics and
idealism of that generation. They have money, and they're making
lifestyle choices, but not selfish ones. They're using resort
homes as a way to lure three or even four generations of family
back together. Boomers seem to feel a sense of guilt about the
time they spend away from family. They're looking for a way to
make up for it." Will Boomers migrate beyond US borders to less
expensive nations for retirement? Superior US health care
services is one reason that the US will likely retain many US
retirees, and a reason we may attract the many of the world's
financially able retirees. How many Baby Boomers are in the
other G7 nations who will opt to grow old in the USA? If we add
the international retiree to the mix, the outlook becomes
exponentially more bullish. Fla.-based market researcher David
F. Parker studies the second-home market. He says the numbers
are elusive: "When people buy housing in resort areas, they do
it for many reasons other than just their own recreational use,"
he says. "There's almost always a big investment aspect. Homes
and condos are often purchased in shared-ownership arrangements
that may be formal, with the housing units rented out for part
of the year in a rental program, or just simple partnerships
with friends. "A house purchased as a second home may become a
primary residence for a retiree within only a couple of years,"
Parker continues. "That happens a lot in Florida." Seniors will
demand more from a retirement home. More active lifestyles for
seniors of the future, and possibly more flexible housing
options. Seniors will also have more money to pay for
convenience, as they have planned for decades to "not rely on
just social security".
"There's been a general realization by investors in the last
couple of years that real estate is doing better than the stock
market," says Earlysville, Va.-based resort marketing consultant
Ralph Bowden. "Amenitized resort communities are the best of
all. The under-performance of the stock market boosted the
second-home market. Even when stocks recovered, people decided
they'd had enough of that roller coaster. A second or third home
isn't just a good investment, of course. It provides real
enjoyment and works as a bond to bring scattered families back
together for holidays and vacations. But without price
appreciation, our story would not be as strong." "The rule of
thumb for price appreciation in second-home communities is 20% a
year for oceanfront property; 15%, on a golf course or for most
other amenities. We've had appreciation in resales from 10% to
30%, and it's all dependent on view," says Randy Brooks,
principal of Mountain Air, a fly-in resort high in the Blue
Ridge Mountains near Burnsville, N.C.