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Older Adults Key To Housing Market
GRAND RAPIDS — A recent study of the future residential market found that empty nesters and retirees are the second largest segment for housing purchases.
According to a study performed by Zimmerman/Volk Associates for the Grand Valley Metro Council and the Downtown Development Authority, the older adult accounts for 23 percent of the residential market potential on average.
For multi-family homes, older adults made up about a third of the potential market and about 20 percent of the single-family home market. This group is second in its desire to live in downtown condominiums and apartments; only young adults were seen as a potentially better draw.
“They are the driving force behind the redevelopment of downtowns,” said Laurie Volk, a principal with Zimmerman Volk of New Jersey, of empty nesters and retirees.
“They’re looking for mixed-use developments where they can walk to places,” she told a gathering of planners and builders hosted by the Metro Council of the group that has grown weary of having to drive everywhere.
The study reported that older adults have different expectations for their housing and are looking for the “ease and convenience of single-level living.” Volk said that means they want a master bedroom suite on the same floor as the main living area and few stairs in the unit.
What these older adults don’t want is to spend their time and money maintaining aging homes, and they want maintenance-free newer housing. Some will also relocate to an entirely new area for the right housing, meaning residents in cities like Chicago could be potential customers.
But what makes older adults really attractive to the local housing market is they have more discretionary income, on average, than other groups.
The Zimmerman/Volk study found a dozen income categories within the empty nester and retirees group. Median income ranged from $35,900 to $232,400 and the corresponding median home value ranged from $76,990 to $487,200, easily exceeding the other groups in the study at the high end of the market. (See related chart.)
The study also revealed that empty nesters and retirees were 29 percent of the potential market for downtown; 37 percent of the potential market for urban centers like Eastown; and 32 percent of the potential market for town centers like the city of Rockford. Most would rather buy, but some are willing to rent.
Volk added that empty nesters and retirees were only going to grow in number in the coming years, as this year the oldest baby boomer turns 59 years old. In fact, 10 years from now Volk predicts a convergence will take place that will raise demand in the local housing market as aging baby boomers and emerging Millennials — those born between 1977 and 1996 — will both be actively participating in the market then.
Both groups, she said, have tired of life in the suburbs and will be looking to move to urban cores, urban centers and town centers that will allow them to walk to stores, shops and entertainment venues. The difference between the two groups is that Millennials will be more likely to rent, at least until they get more established in their careers, while retirees and empty nesters will be more likely to buy.
“You can see there is going to be a convergence in 2015,” said Volk. “That is why it’s important to start planning for this now.”
Older Adults Target Market Groups For Housing
Empty Nesters Median Median Home
And Retirees Income Value (If Owned)
The Social Register $232,400 $487,200
Nouveau Money $185,000 $341,200
Urban Establishment $122,800 $282,500
Post-War Suburban Pioneers $85,100 $241,800
Affluent Empty Nesters $75,200 $209,500
Blue-Collar Button-Downs $60,200 $113,700
Active Retirees $53,000 $181,400
Middle-Class Move-Downs $48,200 $168,500
Middle-American Retirees $45,200 $113,200
Rowhouse Retirees $43,900 $167,100
Blue-Collar Retirees $44,400 $80,700
Mainstream Retirees $35,900 $76,900
Source: Zimmerman/Volk Associates, An Analysis of Residential Market Potential, 2004