Boomer par­ents com­pet­ing against their kids for con­dos

The Washington Post Sunday - - FRONT PAGE - BY YLAN Q. MUI

Mil­len­ni­als have tough new com­pe­ti­tion for the con­do­mini­ums and apart­ments heat­ing up the na­tion’s hous­ing mar­ket: Mom and Dad.

Roughly 10,000 baby boomers are re­tir­ing each day, and re­cent data shows that half of those who plan to move will down­size when they do. Many are seek­ing the type of ur­ban liv­ing that typ­i­cally has been as­so­ci­ated with young col­lege grad­u­ates — so much so that boomers are rent­ing apart­ments and buy­ing con­dos at more than twice the rate of their mil­len­nial chil­dren.

“There’s not one thing I miss about my house,” said Abby Imus, 57, who re­cently moved with her hus­band into a condo in down­town Bethesda, three miles and a life­time away from the house they lived in for more than two decades. “I was so ready to leave.”

This new gen­er­a­tion of empty nester is re­shap­ing the re­cov­ery in real es­tate af­ter the industry suf­fered its worst set­back in half a cen­tury dur­ing the Great Re­ces­sion. Boomer de­mand has helped fuel a surge in high-end hous­ing that fea­tures two-bed­room units and large kitchens rem­i­nis­cent of boomers’ sub­ur­ban homes. That could have big im­pli­ca­tions for cash-strapped mil­len­ni­als, who had hoped to snag af­ford­able stu­dios in build­ings de­vel­oped to house 20-some­things.

The data sug­gests that boo me rs who are down­siz­ing are rel­a­tively well-off. Har­vard Univer­sity’s Joint Cen­ter for Hous­ing Stud­ies found that those ages 55 and older

ac­counted for 42 per­cent of the growth in renters over the past decade. In ad­di­tion, the wealth­i­est tier of Amer­i­can house­holds made up about one-third of new renters be­tween 2011 and 2014.

“Boomers will pay a premium if you can give them ex­actly what they want,” said Matt Robin­son, prin­ci­pal at MRP Realty in the Dis­trict. “Some­thing closer to what was in their house, and that pushes up the price; they’re happy to pay for it.”

Young Amer­i­cans, af­ter all, are not well-suited to com­pete: Many en­tered the job mar­ket in the mid­dle of the re­ces­sion and dur­ing the lack­lus­ter re­cov­ery. Few have had time to build wealth, and many are sad­dled with stu­dent-loan debt.

An­a­lysts worry that the trend is mak­ing af­ford­able hous­ing more scarce at all ages — in­clud­ing for some boomers. Na­tion­ally, the cost of rent has made a dou­ble-digit jump since the re­ces­sion and hit a record $803 a month, ac­cord­ing to gov­ern­ment data. At the same time, the Har­vard study es­ti­mated that the num­ber of fam­i­lies who pay more than half their in­come in rent is ex­pected to rise 11 per­cent to 13.1 mil­lion over the next decade.

Jefferson Free­man, a 25-yearold re­searcher at a pub­lic af­fairs firm, said he is one of the youngest peo­ple liv­ing in his apart­ment build­ing in South­east Wash­ing­ton’s Navy Yard neigh­bor­hood. Over the past two years, he said, more boomers have moved in and are will­ing to pay the $2,400 a month that it costs to rent a two-bed­room apart­ment. Free­man said that he must leave if rent goes much higher.

“A lot of peo­ple my age, if prices con­tinue go­ing up, will prob­a­bly start mov­ing to­ward big group houses,” he said.

The re­bound in apart­ment and condo build­ings has played a crit­i­cal role in driv­ing the re­cov­ery of the broader real es­tate mar­ket. Spend­ing on what the industry calls “mul­ti­fam­ily” build­ings re­bounded in 2011 and is grow­ing faster than ex­pen­di­tures on of­fices and ho­tels. Gov­ern­ment data shows that per­mits to build mul­ti­fam­ily homes jumped 21.5 per­cent in Au­gust from the pre­vi­ous year, while ap­provals for sin­gle-fam­ily homes rose 8.7 per­cent.

The num­bers re­flect two trends that have be­come in­ter­twined since the re­ces­sion. The first wave of baby boomers hit the tra­di­tional retirement age of 65 in 2011, a point at which many be­gin think­ing about down­siz­ing from the fam­ily home. Mean­while, de­vel­op­ers be­gan cap­i­tal­iz­ing on a shift to­ward ur­ban liv­ing that is re­vi­tal­iz­ing ci­ties and trans­form­ing sub­urbs into hubs friendly to pedes­tri­ans and com­muters — of­ten in­ad­ver­tently cre­at­ing the ideal empty nest for those who can pay the price.

That’s what hap­pened at Vita, the 31-story lux­ury apart­ment build­ing ad­ja­cent to the Tysons Cor­ner sta­tion on Metro’s Sil­ver Line. De­vel­oper Bob Ket­tler ex­pected that the build­ing would at­tract a crowd of young pro­fes­sion­als, so he de­signed it with plenty of one-bed­room units. Vita’s pro­mo­tional Web site fea­tures a cou­ple snap­ping a selfie and a young fam­ily catch­ing a movie on the lawn with their toddler.

In­stead, Ket­tler said that the strong­est de­mand has come from baby boomers. Many are re­lo­cat­ing from within the re­gion and look­ing for a low-main­te­nance life­style in a fa­mil­iar neigh­bor­hood. Of­ten, they are still work­ing and not yet ready to re­cline on the sunny beaches of Florida.

But down­siz­ing — es­pe­cially to the con­fines of an apart­ment that might be one-third the size of the fam­ily home — is of­ten eas­ier said than done. Ket­tler said that the most fre­quent com­plaint he hears is that his apart­ments aren’t big enough. A two-bed­room unit gen­er­ally is 1,200 to 1,400 square feet and costs from $3,000 to $4,000 a month, roughly 30 per­cent over the lo­cal av­er­age. One cou­ple passed on a rental be­cause it wouldn’t fit their side-by-side Sub-Zero fridge and freezer, he said.

Ket­tler has learned his les­son: The next 160 units un­der con­struc­tion at the site are larger and de­signed with empty nesters in mind. Just across the state line in North Bethesda, apart­ment com­plex Pike & Rose, by Fed­eral Realty, is tout­ing 24 pent­house units with up to three bed­rooms and two com­mu­nal rooms in which to prac­tice mu­sic. The Flats and the Vio in the Dis­trict, from PN Hoff­man, have un­der­ground park­ing and concierge ser­vices.

“Our def­i­ni­tion of suc­cess and life­style has re­ally changed over the last 20 years,” said Monty Hoff­man, chief ex­ec­u­tive of PN Hoff­man. “It used to be a white picket fence and a lawn and so many cars in the sub­urbs. That’s re­ally be­ing re­placed.”

Of course, many boomers have no plans to move — be­cause they can’t af­ford to and don’t want to. Their net worth re­mains be­low the pre-re­ces­sion av­er­age, and more than half would need to take out a loan to buy their next home, ac­cord­ing to re­cent re­search by the De­mand In­sti­tute. The study found that down­siz­ers were typ­i­cally wealth­ier and liv­ing in pricey homes that might be ex­pen­sive to main­tain.

Boomers are typ­i­cally de­fined as those born be­tween 1945 and 1964, en­com­pass­ing roughly 70 mil­lion peo­ple. They were the largest de­mo­graphic group in the coun­try un­til this year, when mil­len­ni­als took the top spot, and their ap­proach to life in retirement is still evolv­ing, ex­perts said. But even di­vided, their num­bers are large enough to shape the di­rec­tion of the hous­ing mar­ket.

For Neil and Abby Imus, the mo­ment of truth came af­ter the last of their three chil­dren fin­ished grad­u­ate school and got en­gaged.

The cou­ple had raised their fam­ily in a Colo­nial on a tree­lined, one-acre lot in Bethesda. But their kids were start­ing fam­i­lies of their own and it was not likely that they would re­turn to the home­stead. Keep­ing up the yard was be­com­ing a has­sle. No one used the two bath­rooms up­stairs. They didn’t need a liv­ing room and a study. And a fin­ished base­ment. And a sep­a­rate din­ing room.

So they sold the house a year ago, and this sum­mer moved into a condo in the heart of down­town Bethesda.

On a re­cent af­ter­noon, the last rays of sun­light streamed through the floor-to-ceil­ing win­dows while their grand­son raced around their liv­ing room. Their son, Steve, and his wife had brought over wine and spaghetti for din­ner.

Steve had briefly mourned the loss of the house in which he grew up, par­tic­u­larly the fate of the phi­los­o­phy books he had left there.

But Neil Imus was clear: There is no go­ing back.

“For­ever,” he said when asked how long he planned to live in his new home. “We don’t have any plans to move.”

“Boomers will pay a premium if you can give them ex­actly what they want. Some­thing closer to what was in their house, and that pushes up the price.”

Matt Robin­son, prin­ci­pal at MRP Realty in the Dis­trict

BILL O'LEARY/THE WASH­ING­TON POST

Neil and Abby Imus en­joy the sun­light in the liv­ing room of their con­do­minium at the Darcy, in Bethesda, af­ter liv­ing for decades in a fourbed­room Colo­nial. “For­ever,” Neil Imus said when asked how long he planned to live in their new home. “We don’t have any plans to move.”

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