Baby boomers are retiring in California and we are seeing the affect.
The Lawhead Team would like to share this article from the First Tuesday Journal about baby boomers retiring and the affect it is having on California.
Baby Boomers are beginning to retire en masse. Most Boomers are homeowners today and will remain so in retirement. However, the majority are expected to sell and downsize, purchasing a replacement home of equal to or lesser price, contributing greatly to home sales. Nearly half are expected to relocate from the suburbs to more convenient city-living.
The rate of homeownership in California dropped for nearly all age groups in 2013. Those aged 35 to 39 experienced the greatest drop in homeownership. This group is 20% less likely to own a home today than during the Millennium Boom.
Data courtesy of the US Census Bureau
The two charts above track homeownership by age in the western census region and California’s population of baby boomers – citizens aged 65 and over, respectively. In combination, these two charts tell us about the future direction of real estate ownership and sales transactions among the rapidly growing population of California’s senior citizens.
Retirees move real estate
At about the age of 65, most Californians stop working full time and begin capitalizing on the benefits of social security, Medicare and their years of saving. The decision to retire is often swiftly followed by a series of lifestyle changes as retirees take advantage of their newly-increased liberty and accumulated financial power.
One of the most significant changes is the sale of the baby boomers retiree’s current home and the corresponding move to a new, more compact and centralized residence with a better year-round climate or in closer proximity to family. As California’s population continues to age, senior citizens will exert increasing influence over both the housing market and every other aspect of the California economy.
Citizens aged 65-75 are more likely to own property than any other age group, as displayed on the first of the above charts. The accumulated equity in their homes, combined with their savings from a lifetime’s employment allows them to exert a disproportionately strong influence upon the statewide housing market. When these citizens begin to change their spending and living habits in retirement, they create new opportunities for multiple listing service (MLS) brokers and agents who market single family residences (SFRs).
The number of people in California aged 65 and older is displayed on the second of the above charts. This rapidly growing segment of the population is traditionally made up of the retired and soon-to-be retired.
Over the past twenty years, retirees have exerted minimal influence in real estate transactions, as the age group of citizens over 65 was comparatively small. The generations born between 1915 and 1935 – during the Great Depression and World War II – did not have the numbers necessary to remold the housing market in their own image. That is about to change dramatically, as the above population chart demonstrates.
Read entire article about Baby Boomers.