Friday, May 29, 2015

The Magical Power of 61

We have all hear the expression “Baby Boomer”. It refers to those babies born after World War II. But did you know that they are the most influential generation when it comes to real estate?

When most people think of retirees, they may still have the image of a frail elder who is less mobile than in their youth. Nothing can be further from the truth! Today’s senior is a far cry from the stereotypical image from the past. Modern health care practices and other advances keep seniors more healthy and active than ever before. A study has shown that seniors will be the driving force in real estate for at least the next decade!

Furthermore, today’s senior is more likely to enjoy greater freedom from housing-related expenses such as mortgage payments. Most people age 65+ are homeowners, and few need to worry about making mortgage payments. Over 70% have fully paid off their mortgages. They may also enjoy freedom from work and family related obligations giving them the opportunity to be where they really want to be.

Most people live where they live because of obligations. They tend to be within a reasonable distance from where they and/or their spouse work. They may be in an area to be close to a particular school for their children, or in the case of divorced couples, to be close to their children. Conversely some may live close to a parent – either for assistance with child care, or to help the aging parent. 

While most people live close to their jobs or families, retirees have discovered they have the choice of living when and where they want. Where, of course, refers to a geographic location. When refers to the ability to migrate with the seasons. Some chose to live in northern states in summer and southern ones in winter.

When does this Change Happen?

As people enter their 50s and 60s, many begin to consider their future more closely than before. As career and family obligations diminish they begin to cross what being called a “Freedom Threshold.” At age 61, the majority of people realize that they are now free to choose where they want to live.

While the chart below looks like some crazy insect, it shows the different decision making stages of one's life.

How does this relate to real estate?

Within the next five years, Americans aged 50 and over will be over 35% of the population. This population will more than double in the next 35 years! Ages 60 and over are indicated to be the largest sectors for household growth in the next 10 years as discovered in the Joint Center For Housing Studies Of Harvard University:

The Harvard study shows that most retirees tend to move at least once during retirement. Some of the most common reasons are the desire to lower home expenses or free up equity; having a change in health that may make the current home undesirable or unsuitable - such as a home with stairs; divorce or death of a spouse; and an empty nest after children have grown and moved out.

While most people would think that “downsizing” would account for the majority of senior household moves, research has show that this may be a myth! Interestingly it was discovered that only half of retirees choose to downsize into a smaller home. 

About 30% of retirees actually “upsize” into a larger home. The reason for this is that they want to have a home that is comfortable enough to accommodate family members who visit or stay with them – in particular for holidays and summer vacations. 

In other cases, other family members may stay on a permanent basis -such as adult children returning home, or there is extra space for a live-in domestic or health care worker.

No longer tied by employment or child care, the retiree can choose a new location and community. Surprisingly, most seniors choose to live in multi generational communities with only about 7% choosing age restricted communities.

Some other factors that influence retiree’s choice of location include proximity to healthcare facilities, centers for continued education, libraries, museums, attractions and recreational opportunities.

In 2014 over 80% of retirees chose to stay in the same state, while the remainder relocated to a different state or region. 

Most of these choices were weather related with the South Atlantic, Mountain, and Pacific regions being the most popular.

Of the retirees that do not move, most cite a strong emotional connection to their existing home. However this does not mean staying in the status quo. Retirees accounted for approximately 50% of home renovation projects done last year. Surprisingly renovations include many modern high tech features, such as smart technology for heating, cooling, air purification and health monitoring.

In later years, or in the case of declining health, most seniors will eventually consider retirement or assisted living communities or co-habitating. Depending on the choices, this may involve another move.

Decisions and Choices

When planning for the future, there are several considerations and priorities the retiree should review. Some of these are listed below, only you can determine what considerations affect you and your family.

Evaluate Where To Live:

  • Affordability
  • Climate
  • Health Services
  • Friends, family and community
  • Sport and fitness facilities
  • Recreational and cultural activities
  • Opportunities for continued work or volunteering 
Whenever possible, visit a potential area to live to determine its suitability. 

Evaluate Current and Possible Future Expenses:

  • Mortgage or rent and insurance
  • Potential income – from job or house sharing 
  • The cost of health care and transportation to facilities
  • Estate and property taxes
  • The cost of relocation 
  • Utilities, repairs and maintenance
  • The cost (inflation) of groceries, prescriptions, and other consumables (household supplies, toiletries and other)
  • Recreational dues or fees

Evaluate Staying In Your Home:

  • Evaluate the cost of home modifications and services that can facilitate your stay at home
  • Adding safety features to bathrooms, the kitchen or stairs (stair lift)
  • Home care services and health monitoring and alert technologies 
  • Whether family members will remain in the area
  • Health and community connections are in place
  • Ease of access to services and other amenities

If you come to the decision that it is time to move to have a better life, then this can do this in one of two ways. It is possible to renovate, de-clutter and clean to put your house on the open market and wait until a buyer comes along. Or the house can also be sold “as is” within a week to resolve the situation quickly. Contact me for details.

Next week we will take a look at what to do if you if you suddenly find yourself in a situation where you have to sell your house.

So thanks for reading my post. I'm so glad you're here! 

And I really look forward to getting into more great stuff in future posts -- so that you can 
Turn Your House To $OLD!

Feel free to ask me any questions through the contact info below. I would be very happy to help.

Linda  623-335-2662

Article Sources:

Lynda Bathory