Generational Housing Bubble and Retirement Communities

[Tekward]

My DW and I are considering a move to an active adult community in Florida and we have reached the point where we will move but with uncertain timing.

This article highlights that we should probably expect below market appreciation in an adult development as the Baby Boomers age and leave the housing market.
http://www.fanniemae.com/portal/res...er-homeowner-exodus-myers-simmons-071118.html

"With the oldest Boomers now in their early 70s, the beginning of a mass homeownership exodus looms on the horizon, fueling fears of a “generational housing bubble” in which homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners."

 

[Red Badger]

Yep, and us geezers are gonna sell all of our stocks at the same time to pay for retirement. AND, it's all gonna happen on July 53rd, 20-never-in-my-lifetime.

Pure horse puckey and clique bait.

 

[marko]

This assumes those retiring as being in one particular generation rather than those retiring as a group overall.

IOW, maybe that growing group of early-retiring millennials will artificially boost the population of those needing retirement housing. And what happened to all those boomers who cannot afford to retire at all, per the doom/gloom articles?

Maybe the 'Over 55' communities will drop it to 'Over 45' at some point, just like my old 'over 45 hockey club' rotated into 'over 65' as 'old' got older.

Regardless, if you bought into a retirement community at 60 and stay there for 25 years, will you really care about the re-sale value of your home at that point?

 

[Another Reader]

Someone at Fannie felt a need to address a potential "problem" so they asked some academics to "study" the "problem."

There will likely be continued migration from and therefore less demand in tertiary markets. Those markets will likely decline in price, or at least not appreciate as fast as the high demand markets. The high demand markets are underhoused and will continue to see high demand.

The one problem for the future is the cost of repairing and replacing infrastructure as what is new or near new today ages. Much of the housing in Florida, California, and similar desirable places is in places where infrastructure is relatively new. As that ages, the costs to maintain and replace that stuff will approach that of older areas and the lower taxes that attracted people will have to go up. We are already seeing that in California. The increasing cost of living and deteriorating quality of life might slow migration to those areas.

 

[donheff]

Add in immigration and health improvements and the boom isn't so large. I suspect lifestyle choices will have a bigger effect. Articles come our every week arguing that demand for McMansions and homes in golf course communities is way down. It is pure guess work as to whether interest in 50+ communities will increase or decrease with the next generations.

A safer bet is that the costs for retirement communities and assisted living facilities will increase for us boomers in the short term.

 

[joeea]

This article highlights that we should probably expect below market appreciation in an adult development as the Baby Boomers age and leave the housing market.

Even if it were actually true - so what? Would that change your mind about moving?

 

[ShokWaveRider]

Regardless, if you bought into a retirement community at 60 and stay there for 25 years, will you really care about the re-sale value of your home at that point?

+ A Few.

 

[Aerides]

My parents are hoping to move to a 55+ very soon. They don't care about resale value (nor do we want them to even think about it).

In fact, it's one of the benefits. They won't have to worry about the value of their home or the impacts of other factors, or if they would face issues selling.

This move is about being where they want to be until they can no longer live unassisted. And they are 75, not 55. I don't see many 55's in these communities anyway.

 

[imoldernu]

Here's a website that is overwhelmingly complex and very, very large.

http://www.statemaster.com/index.php

Posted because it defines the statistics for housing in each of the United States.
The best use of the site would be to determine current and future home values based on differing criterion.

If I were planning on Florida, as a retirement location for an extended period, I would be looking for the kind of home... ie. mobile, manufactured or stick built as well as the percents of increase or decrease in new construction as of a particular period of time. For instance, the number of manufactured homes in different states ranges from .1% to about 10%.
..................................................................................................
That's just one type of comparison out of hundreds of different statistics.
Rather than trying to explain, I'd suggest you go to the site, and spend a few minutes looking at the options, and perhaps book marking it for future reference. (note the "best places to live" section).

This little quote does more to explain the depth of information than anything I could outline.

We have stats on everything from toothless residents to percentage of carpoolers. Our database is increasing all the time.

 

[SumDay]

We looked at it this way: this is our forever home, and we're in a quasi-retirement community. Next time we move it will be to either the Neptune Society or 6 feet under. I really don't care what the value of this home is after we're gone. In fact, we've thought about leaving it to our church since the kids are out-of-state, totally uninterested in living here, nor do they want the stuff in our house. The church ladies would have a ball getting the estate sale ready.

 

[imoldernu]

My parents are hoping to move to a 55+ very soon. They don't care about resale value (nor do we want them to even think about it).

In fact, it's one of the benefits. They won't have to worry about the value of their home or the impacts of other factors, or if they would face issues selling.

This move is about being where they want to be until they can no longer live unassisted. And they are 75, not 55. I don't see many 55's in these communities anyway.

I realize that they would not be moving into a CCRC like ours, but this type of "age stepped" housing is becoming the newest model for retired people of all ages. The corporation that owns ours has 16 others in nearby states, and Nevada... Search "Simply the Finest", and/or "Liberty Village" , to see if the options fit, and look for this type of retirement in areas of interest. I'd guess that the average age of people who live in the "Villas" (regular homes) is about 70... some as young as 55 and others in their 90's, but still prefer this type of independent living, with the option to moving on to more support... without having to have a major life disruption.

 

[ShokWaveRider]

We have been touring 55+ communities in our state, what we notice more than anything is that it is way more economical to buy a home that is 2 - 5 years old rather than new. The difference can be 30% lower (or more with CDD bond fees negotiable), depending of course on the upgrades selected on the new homes. The problem with new is that almost everything is an upgrade and most sales people tell you to allow an extra 20 - 30% over the posted prices. That is if you can get them to tell you. The only real way is to price out your ideal home, and then compare with re-sales. But you will get the hard sell when you do it this way.

This is for developments that have properly built homes on them, we have not been and will not be going to Mobile parks or MFG home sites. These are not really advisable or recommends for Florida's climate. We know too many people that have been disappointed with buying in those environments.

 

[kgtest]

in which homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners."

Same goes for employee demand. We won't have enough worker's entering the workforce to offset the what, 100s of thousands of boomers retiring on a daily basis. Good for ER, bad for our heirs.



EDIT To recind this statement... apparently contrary to my belief, it's the opposite.



https://www.bloomberg.com/opinion/a...rs-may-leave-workforce-just-as-jobs-disappear

 

[CaptTom]

On the tail end of the "boom," I'm hoping there are a lot of spots opening up in nursing homes and long-term care facilities by the time I need one. Not wishing any ill will against my elders, just that I've been in their shadow my whole life. It would be nice to get some benefit from it before I die.

 

[misshathaway]

Even if it were actually true - so what? Would that change your mind about moving?

It just drives home the point that if you change your mind about living in your 55+ some years down the road, not only will your house not have appreciated much, but it might have decreased in value due to supply. That's just one factor. If the developer is still making new, or other comparable communities are still making new, your resale has to compete with those too.

No do-overs.

 

[ShokWaveRider]

My only real problem with 55+ communities is they seem to put the newer ones in areas where the land value is low and hence the surrounding areas not being our version of ideal.

 

[Midpack]

Good thing we're actively planning to move NOW.

 

[Tom52]

My DW and I are considering a move to an active adult community in Florida and we have reached the point where we will move but with uncertain timing.

This article highlights that we should probably expect below market appreciation in an adult development as the Baby Boomers age and leave the housing market.
http://www.fanniemae.com/portal/res...er-homeowner-exodus-myers-simmons-071118.html

"With the oldest Boomers now in their early 70s, the beginning of a mass homeownership exodus looms on the horizon, fueling fears of a “generational housing bubble” in which homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners."

71 million millennial compared to 74.1 million baby boomers, I don't expect there will be a fall off of home prices in Florida retirement communities.

 

[The Cosmic Avenger]

If anyone wants to look at the raw Census data, I was curious myself, so I found this table. A difference of a million or three out of 20 (by 5-year cohorts) might not seem like a lot, but that's 15%. Also, using the numbers cited by Tom52, imagine if there were suddenly 3 million (or maybe we can estimate 2M, if some of those are married/cohabiting) empty houses/apartments! That would have a huge impact on the market.

 

[joeea]

I really don't care what the value of this home is after we're gone.

Your heirs might.

But I agree that the future value of your final home shouldn't be of primary concern.

 

[Bir48die]

I think there is less appreciation because of the turnover rate. Yes there are houses up for sale due to unforeseen circumstances. Sorry, just the way of the world.

 

[Another Reader]

This reminds me of the "shadow inventory" of the housing meltdown of 2009-2012. Supposedly the banks were going to be forced to put millions of properties on the market, effectively destroying the market. That never happened.

I don't see much of a market meltdown this time, either. Yes, some poorly located McMansions in less desirable outer ring suburbs may not appreciate or may even drop in value. There's an ebb and flow pattern with those properties anyway, so it may not be that distinguishable this time around.

 

[Chuckanut]

Most of the people I know who have bought into an 'adult community' have bought into it for life. Their goal in the 'golden' years is to enjoy life. Any lack of appreciation is a problem their heirs will deal with not them.