Reblogged from Scotsman Guide – Victor Whitman
The post-war baby-boomer generation continues to be a force in the U.S. housing market, but tends to garner far less attention than the younger generations. According to a recent Freddie Mac study, typical assumptions about baby boomers are often not accurate. Freddie Mac Chief Economist Sean Becketti spoke with Scotsman Guide News about boomers and why he pays attention to their homebuying patterns and needs.
With baby boomers, could you define what age group we are talking about?
Baby boomers are the only ones with an official definition from the U.S. Census Bureau. Everything else is fuzzy, with different groups using different cutoffs. But for the baby boomers, it is officially if you were born between 1946 and 1964, and there’s about 75 million of them.
How important is this generation to the housing market?
We think they are very important. One way to think about it is that they are a quarter of the population, but they control about two thirds of the equity in single-family homes, about $8 trillion dollars. Each group is important in the economy, but these people are sitting on most of the housing wealth.
Are boomers still considered important for future housing demand for new or existing homes?
Sure. There is a substantial fraction that are intending to purchase another home in the next few years. There is still a significant number in this age group that are planning to move again, and most of them are planning to move to another house. The flip side is that roughly two thirds would like to age in place. Well, that is a lot of existing homes that are held off the market.
Millennials get most of the press these days. Why haven’t baby boomers gotten more attention?
Traditionally, there is a lot of focus on people who are first-time homebuyers. That is where a lot of the purchases come from, and the fact that millennials haven’t purchased homes at the rate of previous generations has caught people’s attention. They are waiting for this group to kick into gear as previous generations have done. People haven’t really thought that hard about previous older generations because they went through a fairly predictable cycle.
Are there any particular buying trends or needs of the boomer generation?
We looked at a study that was done by the National Association of Home Builders. They were looking for the housing preferences of baby boomers, and they had a hard time finding any key differences between the boomers and previous generations.
The two older generations, the boomers and the silent generation, wanted more outdoor maintenance help, and they weren’t interested in playgrounds, like the two younger generations were. The other seven items were identical and ranked pretty closely. Pretty much near the top, all four generations wanted a suburban environment. They wanted parks nearby, convenient shopping, and so on. There is a cliché that says that age is just a number. In the current situation, people are making the mistake of saying, "Oh, well, somebody is 65," and they think back to what 65-year-olds behaved like when they were younger, and that is not how 65-year-olds are acting now. They are acting like younger people.
We hear a lot of reports that millennials may tend to want to use online platforms to search for loans and definitely need to be engaged through social media. One would assume that baby boomers get their information in more traditional ways, but is this true?
One thing you have to remember is that the baby-boom generation covers a wide age span. At the younger end of the baby-boom generation, people are engaged in social media, are very digitally savvy, comfortable with modern technology. At the older end, you probably have less of that. It is a question that people are trying to resolve: What is the best way to get information to older Americans, and what is the best way to engage them? I don’t think we have a clear answer to that question. The only thing that we do observe is that as you get into older and older groups, you do have somewhat of a decline in technical savvy.
The views expressed are my own and do not necessarily reflect the views of my employer.
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