Baby boomers are the fastest-growing group of renters in America. Between 2009 and 2015, the number of renters aged 55 or above rose 28%, and many of them don’t plan to buy a home any time soon. I can see the appeal: No mortgage, no maintenance, and no more mowing the lawn. But are they really saving that much money by renting or are they simply moving on from an empty nest? And how will their return to the rental market impact affordability for everyone?
Here are the distinct benefits to renting that baby boomers love:
No property taxes, maintenance, or homeowner association fees
In some cases, no surprise (or major) home maintenance repairs. It must be nice to skip roof repair.
Communal spaces in luxury apartment builders are perfect for social baby boomers who have downsized.
It’s easier to relocate when you rent, especially as families change and grandkids are born. Baby boomers who love to travel can even rent overseas.
That last point is especially important for baby boomers. Renting does typically give them more financial freedom… but what they really want is more mobility: Boomers planned 4-5 leisure trips and spent an average of $6,600 on travel in 2019. Now consider that 3.2 million people retired in 2020, and that after being quarantined for over a year, they’ll have more time and access to family and friends. So what does a generation do when they spend less time at home and more time on the beach or visiting family? They downsize to a rental.
The real thing on my mind is how this generation has the potential to forever change the rental market, and how that is going to affect all renters. Baby boomers have the cash flow for a considerably nice rental home, especially compared to the millennial counterparts. They hold $59.4 trillion in generational wealth, compared to the $5 trillion that millennials have. That is twelve times as much. If they continue to grow as a renting population, baby boomers have a profound impact on the price and quality of rental homes. This will be tough for millennials, many of whom already pay more than 30% of their income in rent.
If renting is to remain a truly sustainable way for Americans to live now and into their golden years, then something is going to need to change. From taxis to takeout, new and innovative technology and services have transformed some of America's oldest industries. Property owners should focus on solutions that improve outdated processes with the added benefit of making living cheaper for their renters. Replacing security deposits with insurance is just one of many solutions.