Analysis: Boomer downsizing trend hasn’t materialized yet, but may
(Reuters) – When Barbara and Mark Gomperts became empty nesters a few years ago, they found themselves using just a fraction of the 3,000-square-foot, five-bedroom house where they had raised their children in Vienna, Virginia.
They bought a townhouse in nearby Burke that was a third the size of the house they sold. “We just didn’t need as much space to be happy,” Barbara said in an interview. She is using some of their monthly savings to retrain for a second career.
The Gomperts may be on the leading edge of a movement some real estate and aging experts have been predicting for a while: a massive sell-off of big homes by baby boomers seeking smaller quarters.
The expected downsizing trend has yet to show up in national housing data, and some experts doubt it will become large enough to affect home prices. But there are solid reasons why boomers may seek to downsize.
Despite the housing crisis that started in 2006, many older Americans have considerable home equity that can be tapped to bolster retirement. The AARP Public Policy Institute reports that 80 percent of Americans over the age of 50 are homeowners, and more than 80 percent of those 50 to 64 have home equity. The median home equity for households in the 55-to-64 age range in 2010 was $100,000 (65,479.31 pounds); it was $135,000 for those 65 and over.
For many, that equity will be an important resource. Just 17 percent of Americans over 55 say they are confident they’ll have enough to live on in retirement, according to the 2013 Retirement Confidence Survey released last month by the Employee Benefits Research Institute.
Housing is a major expense ripe for trimming. The AARP Public Policy Institute reports that 29 percent of middle-class households over age 50 were spending more than 30 percent of their income on housing in 2009, up from 20 percent as recently as 2000. The portion of households spending 50 percent or more of their income on housing nearly doubled during that period, to 9 percent.
Courtesy of www.reuters.com
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