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New Homes for Baby Boomers Far from preparing to scale back spending, many baby boomers seem to be gearing up for greater luxury in their retirement years. This is, at least, what their participation in the housing market would suggest. Since they first appeared on the scene almost sixty years ago, baby boomers have been the generation that launched a thousand trends and at least as many marketing campaigns. Now approaching retirement age, they're not slowing down. Many baby boomers are only now at the apex of their earning power and, with empty nests and no more mortgages, have disposable incomes that are bigger than ever. Wise marketers continue to follow their spending patterns and preferences with a close eye.One of the big baby boomer movements in recent years has been towards real estate. Second homes, investment properties and retirement homes (some being purchased ahead of time) make up the baby boomer housing boom that's sweeping various parts of the country. Second home purchases have surged, accounting for more than a third of all residential property sales by some recent counts. A study by the Washington-based National Association of Realtors has shown that nearly a quarter of homes bought in 2004 were purchased for investment purposes, and 13 percent as vacation homes. On the whole, second-homes made up 36 percent of the 7.7 million homes sold in the country last year. This second home sales rate marked a 16.3 percent increase from 2003.Most economists are predicting the housing market will cool, at least in its hottest spots, as inflation pushes interest rates higher and wages stay about even. Any slowdown in demand for homes could reduce consumer spending. In the last three years, homeowners who refinanced their mortgages took out $400 billion in extra cash, and this sum in turn fed back into the economy. It follows that this source will dry up as the housing market falters. Despite home equity, people are quite likely to curb spending – dragging the economy into further slowdown. Already, jobs in several sectors, including recreation and the arts, are down since last year. Baby boomers might be the best hope of spinning the downturn around. Their continued interest in second homes is helping drive expenditures, not only on real estate but also on furnishings and improvements. These latter purchases might account for quite a lot of revenue. The South Florida Business Journal has reported that affluent baby boomers are pushing the market for luxury homes forward. Real estate sales associates attest that their primary buyers for luxury homes are people between 40-58 years old, where luxury homes are those with a list price in the top 10% of the market and offering "exceptional style and quality."A survey conducted by real estate broker Coldwell Banker found that 65% of baby boomer home buyers were opting for larger homes, while only 17% were downsizing. A full 15% were in the market for a second home or vacation home.It appears that many baby boomers are not preparing to cut back on spending. On the contrary, they are looking towards retirement as a period for enjoying life's rewards, and marketers are well advised to see them as luxury market drivers. Back To Mature Market News → Go To The GenerationTarget.com Mature Market Bookstore → |
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