SENIORS BECOME RENTERS
Baby boomers are altering the American Dream
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aby boomers are altering the American Dream.
After having the home in the suburbs, the kids, the two cars, and maybe even the picket fence, a growing number now want to ride elevators to rental apartments and walk out the door to restaurants. When the kids are grown, an increasing number of empty nesters are selling homes and aspiring to live like urban millennials — in rental buildings full of amenities and free of lawn mowing, shoveling, mortgages and property taxes.
It’s not unusual for empty nesters to consider downsizing and avoiding tasks such as yard work. But typically downsizing has meant buying smaller homes or condos. Now, for a generation with a reputation for setting trends and yearning for freedom, an increasing number want to rent rather than own.
“It’s nice to have freedom,” said Michel Winkelstein, who moved into a downtown Chicago apartment with his wife, Susan, after selling their suburban home about three years ago. Michel Winkelstein now walks to work at his law office, and Susan Winkelstein says she feels like she’s on vacation every day. Apartment living frees up time spent on maintenance and they walk to restaurants, plays, movies and musical events.
“We both feel like we are in our 20s,” said Michel Winkelstein.
The number of boomer renters is still small. But there were just 10 million in their 50s and 60s in 2005, and in 2015 there were 15 million. They account for more than half of the nation’s renter growth in the last 10 years, according to Jennifer Molinsky, researcher for the Joint Center for Housing Studies of Harvard University.
She calls it a “dramatic increase,” and a trend that’s likely to continue as the giant generation of 77 million people, born between 1946 and 1964, ages and seeks easy living.
At a recent National Multifamily Housing Conference, housing consultant Jeff Kottmeier was surprised by “landlord after landlord mentioning the surprising surge in older renters.” Many of the boomers have sold homes and have been looking for luxury apartments in walking distance to stores and entertainment, said Kottmeier, of John Burns Real Estate Consulting.
In many metro areas, older renters are driving demand, he said.
Renting is a unique twist for many boomers, who began their adult lives when the sheer size of their generation starting households drove a sharp climb in home prices in the ’70s and ’80s. For years many assumed renting was a waste of money and a home an essential investment. But after living through the recent housing crash, that assumption has been tarnished and renting now seems fine.
“You aren’t going to get equity quickly any longer,” Michel Winkelstein said. As empty nesters, he and his wife sold their three-bedroom home, for less than they had paid for it in 2002, and considered buying a condo downtown. As they debated location, they worried about buying.
Their real estate agent, Karyn Meyers, suggested renting as a short-term experiment that would allow them to move easily, and without selling costs, if they
The number of boomer renters is still small. But there were just 10 million in their 50s and 60s in 2005, and in 2015 there were 15 million. They account for more than half of the nation’s renter growth in the last 10 years, according to Jennifer Molinsky, researcher for the Joint Center for Housing Studies of Harvard University.
She calls it a “dramatic increase,” and a trend that’s likely to continue as the giant generation of 77 million people, born between 1946 and 1964, ages and seeks easy living.
changed their minds. Now Winkelstein said he has no urge to move.
Still, most boomers are not regarding housing much differently than the generation before them, said Lawrence Yun, economist for the National Association of Realtors. The number of boomers renting is impressive simply because the generation is large, but there does not seem to be an increase in the percentage renting compared with the previous generation as they entered retirement, he said.
Eighty percent of boomers own homes and want to be owners, he said. In a study by AARP, 74 percent said they wanted to continue to live in their homes throughout retirement. Like their parents, boomers are inclined to stay in their homes after the children are grown, and welcome them back around the dinner table they’ve shared for years.
But homeownership among people 50 to 64 slipped 5 percentage points between 2005 and 2013, notes Molinsky. Part was driven by foreclosures and job loss in the recession. Others are “transitioning to renting as a choice,” she said. They want “cost-effective options that demand less time, physical effort and money to maintain.” As people enter their 70s, she expects the desire for ease and safety to intensify.
The combination of 8 million foreclosures and a 10 percent unemployment rate during the housing crash and Great Recession sparked a surge in rentals among all age groups during the last few years and has caused rental rates to soar. There are 19 million renters who previously owned homes, according the Urban Institute. But older boomers were not as hard-hit in the housing crash as people ages 36 to 55, because people in their 50s and 60s tended to have purchased homes before the housing peak and therefore had more equity to absorb losses.
With a tight rental market now, given the increase in renters, Molinsky notes there has been little interest in developing affordable housing for those who need to rent due to economic weakness. Rather, the interest in potential boomer renters is coming from developers seeing opportunity in the luxury market.
Boomer parents are also being tempted to rent as they see the housing their children are considering in new luxury buildings, said Randy Fifield, vice chairman of the Fifield Companies, which develops apartment buildings.
“They see the light and the view, and they are jealous,” said Fifield. “They want a vibrant life” instead of isolation in empty homes in quiet suburban neighborhoods. “They are busy with their phones and iPads, and can live in a new building for less than a mortgage and stop writing checks to the handyman and the landscaper. They don’t have to worry about the snow.”
Attorney Howard Pearl was attracted to that life after his children left home. The family home in suburban Chicago “was a great place to raise a family,” he said, but when he was alone he didn’t want “a sleepy family town. There were no restaurants or theaters.” So he moved into the E2 Apartments in the morebustling suburb of Evanston, which he says is vibrant like the theme song from TV’s “Cheers”: “Everybody knows your name.”