It’s winter in southwest Florida and although we talk a lot about beach, road and Publix congestion, we really do love visitors to the Island. We, of course, would love them even more if the visitors converted to owners and not just on Anna Maria Island.
Florida and Arizona have built a real estate market catering largely to retirees, specifically baby boomer retirees. As much as we boomers want to continue influencing the culture and finances of the country, we will inevitably pass away. Not only do we have to face death we may also need to face not being able to live in our homes and migrating to family or assisted living facilities.
Now that I’ve completely ruined your day, these numbers will further depress you. According to Zillow, one in eight owner-occupied homes in the U.S., or roughly nine million residences, are set to hit the market from 2017 through 2027. In addition, Zillow calculates that by 2037 one-quarter of the U.S. homes for sale, or roughly 21 million homes, will be vacated by seniors.
This is a lot of real estate and a good percentage of these homes are in over 55 communities where at least one owner needs to meet that age criteria. These communities have been popular with baby boomers for decades. However, the concern is that the next generation of homeowners are not only looking for a different lifestyle but there aren’t even enough of them to fill the vacancies.
In theory, older homeowners are replaced by younger homeowners and the recent lack of available properties to purchase has kept many millennials stuck in rentals, so this should be a good thing. However, in the case of many of the baby boomer properties, the properties are located in areas where younger buyers don’t want to buy. Suburban living is less of a draw than for previous generations and millennials prefer cities and major metropolitan areas. In addition, even generations below the baby boomers who may be in pre-retirement years have little or no interest in living in planned, age-restricted enclaves no matter how great the weather is.
Economists worry about what the impact of unpopular large retirement communities will have on the local economy surrounding these areas. There are some market experts who suggest that a retooling of these communities to make them more attractive to families and lifting the age restrictions could be a better use of these properties down the road. Arizona and Florida are naturally in the crosshairs of potentially having an overabundance of senior housing. Thankfully for us, Florida’s east coast will be harder impacted.
Real estate markets are a balancing act. If one part of the market has a problem, another part may benefit from those problems. For example, the beautiful and exotic state of Hawaii.
Who doesn’t love Hawaii for vacations, but do you want to live there? Apparently lots of people don’t since Hawaii is experiencing the third straight year of negative migration, with the young, highly educated and well-off being the ones most likely to leave.
Hawaii has the highest cost of living in the country, and according to the Tax Foundation, the real value of $100 in Hawaii is $84.39. According to Zillow, the median list price for a house is $630,000 compared with $284,999 for the U.S. as a whole. In Hawaii, gasoline has been as high at $5.00 a gallon and a gallon of milk $7.00. Hawaiians may be going kicking and screaming from their beautiful state but they’re leaving for the same reasons residents of New York, California, Illinois and New Jersey are leaving – taxes, cost of living and public education.
Inevitably, we will see a dramatic change in the real estate market in the near future. Right now, the baby boomers still rule and will for a while.
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