19 Mar Boomers Become Cautious As They Enter The Market
As large numbers of baby boomers continue to re-enter the housing market, they do so with caution.
These retiring boomers are seeking an easy and care free lifestyle and are getting it at a fraction of its normal cost. According to an Investors.com article, over half of the builders in active-adult housing have cut prices in hopes of boosting sales in the short run.
Some builders cut prices by more than 25%, the national average is around 13% in discounts. Along with the reduced prices, builders are offering other services that may entice baby boomer buyers. Incentives include paid 1 year community association fees, upgraded appliances and carpet, or architectural upgrades.
While these strategies will probably help builders and developers in the short run, baby boomers are growing increasingly cautious when it comes to home buying. Unfortunately, most of their retirement has been depleted because of economic turmoil. This means that most boomers are funding their new retirement homes with the equity from their current homes. The values of these homes have dropped of course.
Builders and developers in the active adult niche are poised for a major influx of potential homebuyers as the boomers enter retirement. The question though is what will they be looking for exactly? Many think that luxurious amenities such as golf courses and spas are a thing of the past. Others think that once the market returns, so will the desires for luxury.
There is no way to know for certain. It could even be a combination of the two. For this reason, we need to stay on top of our market research. I think that certain geographics will affect the outcome of this debate. A baby boomer retiring in Los Angeles will probably have a different retiring preference than one in rural settings. Also, will more people choose to retire where they spent most of their life? Will taxes encourage more flight from the Northeast? One thing seems evident, at this point smaller and more efficient seems to be the trend.
