Retirement Housing Forecast, Part 1: Location

While age-restricted communities have received the bulk of the attention in our industry, most of the demand will continue to be in non-age-restricted communities. Consider the following statistics from the 1990s:

• 24% of those who turned 65 during the decade bought a home during the decade.
• 72% of these buyers stayed in their local metropolitan area.

Our research shows that baby boomers, the oldest of whom turn 57 this year, will have a higher propensity to stay in their metropolitan area than the pre-boomer generation.

To prepare our industry for the coming wave of older home buyers, we have spent more than 300 hours researching what will occur in the 55-plus housing market during the coming decade. This is the first of a four-part series summarizing our conclusions. A complete report will be available for purchase in July.

The four-part series will be as follows:

1. Location: For all 3,000-plus counties in the country, we have been able to forecast how many homes will be bought by home buyers 55 and older during the next decade.

    

2. Marketing: The 11 distinct categories of baby boomer home buyers will have dramatically different ideas about retirement housing.

    

3. Design: The Boomers will redefine the features builders incorporate in new homes.

    

4. Strategies: From cheap boxes in rural areas to luxury high-rises downtown, opportunities abound for home builders.

PART 1. LOCATION

Destinations
While Arizona, Nevada and Florida will continue to be the fastest-growing retirement states, the Pacific Northwest, the Rocky Mountain region, Texas Hill Country, the Ozarks, the Carolinas and New England also will attract more than their fair share of retirees. On the following map, orange states are retirement havens, yellow states attract more than their fair share of retirees, and green states are net losers of retirees.

The Site of Their Youth
Many retirees return to the site of their youth, especially college and military towns where housing is affordable and the climate is attractive. Places such as Austin, Texas, and Colorado Springs, Colo., are popular destinations.

Urban Areas
Most people, however, prefer to live close to family and friends, and the percentage who stay close to home will increase during the coming decade. More people who reach retirement age will stay in their current area because future retirees:

1. want to continue working.
2. will have more money than any prior generation.
3. will take advantage of the $500,000 capital gain tax exclusion by buying a much smaller home or a condominium.

The top 10 metropolitan areas for homes purchased by retirees will be:

1. New York
2. Tampa, Fla.
3. Phoenix
4. West Palm Beach, Fla.
5. Los Angeles
6. Chicago
7. Boston
8. Riverside-San Bernardino, Calif.
9. Philadelphia
10. Sarasota, Fla.

The exact statistics for all areas will be available in July.

Areas Adjacent to Urban Areas
Many retirement destinations are within a few hours of a major metropolitan area, allowing retirees to stay close to their family and friends. Notice the high concentrations of orange and yellow near many of the most populated metropolitan areas in the country.

For example, areas just outside San Francisco, Los Angeles, Washington, Dallas and Denver are popular retirement destinations.

Next column: Marketing

About the AuthorJohn Burns publishes three free Building Market Intelligence e-mails each month: U.S., Local and Strategic. He helps real estate executives develop and execute strategic plans, conduct market research and maximize profitability. More information is available at www.realestateconsulting.com.