How boomers will change housing market

A new report says seniors are healthier and more active and might not be happy living in traditional nursing homes.

By MSN Money Partner Oct 18, 2012 2:58PM
Portrait of smiling senior couple on bicycles -- Robert Daly, OJO Images, Getty ImagesBy Bruce Kennedy

The demographics on aging in America are literally a gray area. The number of people age 65 and older in the U.S. is expected to rise to an unprecedented 55 million by 2020 -- up 36% from 2010. By the end of this decade, nearly 40 million baby boomers -- those born between 1946 and 1964 -- will turn 65.

According to a new study by the Urban Land Institute, those so-called leading-edge boomers, the ones born between 1946 and 1956, will not act like prior generations as they approach the golden years. In fact, they'll probably blow a hole through the way we look at retirement, housing and the elderly.

John McIlwain, the ULI study's author, divides people over age 65 into three waves: the World War II-era "greatest" generation, the "silent" generation (ages 67 to 85) and the leading-edge boomers. These three groups, he says, will live longer than any generation before them, with many living past age 90 and even 100.

One of the biggest challenges facing this new breed of seniors, he notes, is that few will have the financial resources to support themselves through a longer retirement. "That's going to put a demand on federal resources, as well as family resources and charitable resources," he said in an interview. At the same time, people under age 35 are going through some of the hardest economic times since the Great Depression and will have to compete with their elders for limited resources.

McIlwain says this demographic change will have a major impact on the U.S. housing market. The leading-edge boomers are expected to be more healthy, active and independent -- which means many will want to remain in their current homes. And those who do move, he says, will be looking for urban locations with smaller and easier-to-maintain housing where they can be close to friends, families, work, transportation and social amenities.

This change could lead to a decline for the estimated 50,000 housing communities across the U.S. providing nursing care for seniors. The recent economic downturn has made those facilities too costly for many families. And given that the average age of someone living in a senior facility is 84, such communities are having difficulty finding new residents.

How will the housing sector change in response? The ULI report says many of today's seniors and baby boomers are creating new niche housing markets, including multigenerational living, which is rising at a faster rate than overall household growth in the U.S., as well as group living communities. College towns, which allow seniors to enjoy campus activities while being near children and grandchildren, are also expected to see more older residents.

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