Baby Boomers Seem to Be Staying in Place
Baby Boomers coming of age in the 1960s rebelled against a lot of “norms” followed by previous generations. Now that many Boomers are closing in on retirement age, many housing experts are wondering if they will also handle old age differently.
One of the latest trends they’ve been credited with leading is downsizing to apartment living and driving apartment demand. But do the numbers actually bear that theory out?
Millennials on the Move
According to Patrick Simmons, director in the Economic & Strategic Research Group at Fannie Mae, the downsizing narrative is overblown. In a recent commentary, Simmons observes that while the Boomers are popularly considered a major force behind the run-up in apartment demand, in fact, their occupancy in apartments has increased only modestly in recent years.
Rather, he notes, the major demographic force behind rising demand for apartments is the Millennial generation. Between 2009 and 2014, Millennials’ consumption of apartments increased more than 10 times as much as that of Boomers.
That might come as a surprise given the stream of media coverage suggesting that Millennials are all living at home in their parents’ basements. And, in fact, there is some truth to that caricature, Simmons tells The Home Story.
Millennials are forming households at a lower rate than previous generations, he says. However, once they do form households, they are more likely to occupy apartments than either Generation X or the Boomers at the same age. And because the Millennials are the most populous generation in U.S. history, this translates into an increase in demand on the order of millions of apartments over the past five years.
Boomers, on the other hand, are more or less staying in place, says Simmons. Aging Boomers are increasing demand for apartments among older adults, but this is primarily a matter of the Boomers already in apartments remaining in these homes as they grow older.
“As successively larger waves of Boomers have advanced into [a more mature] age group and replaced the much smaller generations who preceded them, the ranks of late-middle-aged and early-elderly apartment renters have swelled,” Simmons writes in his commentary. “It is likely that some analysts see this substantial increase in the number of mature renters and erroneously conclude that large numbers of Baby Boomers are changing their housing behavior.”
In fact, the numbers show “only a modest increase in Boomer apartment occupancy between 2009 and 2014,” he says.
Building Size Matters
One other factor Simmons suggests might have given the impression of a recent wave of Baby Boomers moving to apartments is that larger complexes have seen more Boomers moving in than smaller buildings, and media attention is likely more focused on these larger developments. In buildings with 50 or more units, Boomer occupancy grew by 16 percent between 2009 and 2014, compared with just 5 percent for buildings of all sizes.
Simmons says he couldn’t be sure why that was the case, but suggested it might be that larger buildings offered a combination of services, amenities, and locations more attractive to older residents.
Regardless, his analysis suggests that stories of the Boomers’ growing apartment appetite have been greatly overstated. It’s the Millennials’ world now. We’re just living in it.
Estimates, forecasts, and other views expressed in this article should not be construed as indicating Fannie Mae’s expected results, are based on a number of assumptions and may change without notice. How this information affects Fannie Mae will depend on many factors. Neither Fannie Mae nor its Economic & Strategic Research (ESR) Group guarantees that the information in this article is accurate, current, or suitable for any particular purpose. Changes in the assumptions or underlying information could produce materially different results. The ESR Group’s views expressed in this article speak only as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.