Millennials have tough new competition for the condominiums and apartments heating up the nation’s housing market: Mom and Dad.
Roughly 10,000 baby boomers are retiring each day, and recent data shows that half those who plan to move will downsize when they do. Many are seeking the type of urban living that typically has been associated with young college graduates — so much so that boomers are renting apartments and buying condos at more than twice the rate of their millennial children.
“My husband and I lived in Washington DC for 12 years as Federal employees,” said Marion Palaza. “We lived in a condominium so when we were ready to return to San Antonio, and we moved into a large home in Stoney Oak.” After living in a 3,200 sf home with just the two of them, they realized the yard work and maintenance were never ending. The Palaza’s decided condominium living was in their future.
This new generation of empty nester is reshaping the recovery in real estate after the industry suffered its worst setback in half a century during the Great Recession. Boomer demand has helped fuel a surge in high-end housing that features two-bedroom units and large kitchens reminiscent of boomers’ suburban homes. That could have big implications for cash-strapped millennials who had hoped to snag affordable studios in buildings developed to house 20-somethings.
The data suggests that boomers who are downsizing are relatively well-off. Harvard University’s Joint Center for Housing Studies found that those age 55 and older accounted for 42 percent of the growth in renters over the past decade. In addition, the wealthiest tier of American households made up about one-third of new renters between 2011 and 2014.
Analysts worry that the trend is making affordable housing more scarce at all ages — including for some boomers. The Palaza’s first stop on their condominium search took them to The Alteza in downtown San Antonio, located 25 floors above the Grand Hyatt.
“When stopped in, we told them we were going to take a look at what was also available in Austin and Dallas,” said Chuck Palaza. “One of the current residents said ‘go ahead, but you won’t find anything close for the money.’ After going up there, he was right, there was no comparison. In Austin, they showed us some 2-bedroom homes that my closet was bigger than the second bedroom, and they were at least $100,000 more.”
Of course, many boomers have no plans to move — because they can’t afford to and don’t want to. Their net worth remains below the pre-recession average, and more than half would need to take out a loan to buy their next home, according to recent research by the Demand Institute. The study found that downsizers were typically wealthier and living in pricey homes that might be expensive to maintain.
Boomers are typically defined as those born between 1945 and 1964, encompassing roughly 70 million people. They were the largest demographic group in the country until this year, when millennials took the top spot, and their approach to life in retirement is still evolving, experts said. But even divided, their numbers are large enough to shape the direction of the housing market.
For Marion and Chuck, the downtown environment in San Antonio was a big draw. “It is so nice not to have to get into a car. You can do everything you want to do, get exercise and not worry about driving home, says Marion.” The couple enjoys walking to the trendy Southtown area for new dining options, and the River Walk has become a fitness trail for locals. “I ride my bike or jog down there nearly every day,” Chuck adds. “The area is just beautiful and you don’t have to worry about any of the street traffic.”
After attending the recent opening of Yanaguana Gardens at Hemisfair in their back yard, the couple stopped into the Ruth Chris Steakhouse in the lobby of the Grand Hyatt for a drink at Happy Hour. “I always wanted a bar in the basement, says Chuck “and now I have it – it’s Ruths Chris.”
And it just keeps getting better. Marion adds “The concierge team is so nice. We are always seeing top performers at the Tobin, and there’s always so many things to do. Alteza and downtown San Antonio was the best choice we could have made, and we came here first.”
Less than 30 residential units remain available at The Alteza. For more information on current pricing and availability, click here.
This story includes excerpts from a story BY YLAN Q. MUI, Washington Post