Now outnumbered by Millennials, Baby Boomers and others aged 55 and older nonetheless may be competing with their younger counterparts for the same pool of rental housing. Freddie Mac’s first-ever survey of housing plans among those born before 1961 reveals they are typically inclined to rent versus own.
Freddie’s 55+ Survey shows an estimated six million homeowners, and nearly as many renters, prefer to move again and rent at some point. Of those that expect to move again, over five million indicate they are likely to rent by 2020.
More to the point, they expect to do so economically. Seventy-nine percent of 55-plus renters, and 83% of 55-plus homeowners who expect to rent their next home, believe their next home will cost the same as or less than their current one.
That belief may clash with reality sooner or later. “When a population this large expects to move into less expensive rental housing, we have to expect it will create significant new pressure on both the supply and cost of existing affordable rental housing,” says David Brickman, EVP with Freddie Mac Multifamily.
Earlier this year, the Mortgage Bankers Association released a study charting the current imbalance between demand and supply for affordable apartments. It traced the current shortage in large measure to the Great Recession, which caused disruptions to the owner-occupied market caused by the global financial crisis—not least the wave of foreclosures the crisis brought. “While diverted homeowners resulted in demand for nearly six million additional rental units, rental housing only grew by 5.2 million” in that period, the report stated.
“Demand for rental housing has greatly outstripped supply, rapidly pushing vacancies down and rents up even as incomes fell,” Lynn Fisher, executive director of MBA’s Research Institute for Housing America and VP for research and economics at MBA, said when the study was issued in May. “The supply is still trying to catch up with the demand.”
Freddie’s survey similarly points to the need for additional affordable rental housing. Forty-seven percent of the 55-plus renters surveyed said they struggle from paycheck to paycheck, while 13% acknowledged sometimes being unable to afford basics until the next payday.
Among 55-plus renters who plan to move again, 71% plan to continue renting, according to Freddie’s survey. This may be a renter-by-choice decision for many; 38% of respondent said they have enough extra money to go beyond each payday including for savings. In addition, more than half of all respondents (59%) think it makes financial sense for people their age to be renters, a view held by 67% of multifamily renters.
With 60% of respondents choosing it, affordability topped the list of priorities for those contemplating where to move next. Among factors rated as “very important,” affordability was followed by amenities needed for retirement, selected by 47% of respondents; living in a community where they are no longer responsible for caring for the property (44%) and being in a walkable community (43%).
If and when they do move, they don’t want to go far. Among those who plan to move again, 31% of 55-plus renters would like to relocate to a different neighborhood in the same city, while 23% would like to stay in the neighborhood. That compares with just 18% who would like to relocate within the same state and 24% who would prefer to move out of state. GfK conducted the online survey on behalf of Freddie over two weeks in February, completing a total of 5,914 interviews.
story credit: globest.com
If you want to learn about some financing options, or if you’re looking to get pre-qualified, contact Parker Turk at Sun American Mortgage Company: 602-616-3774.