Bonus: Why boomers aren't budging

From the archives: We have a serious housing crisis, and it's just going to get worse.

Many seem suprised by the recently published Globe and Mail article titled Forget downsizing: Canadian seniors staying in large houses well into their 80s, due in part to lack of options. I was not, having been writing about this for years on The Mother Nature Network before it was folded into Treehugger and most of my boomer angst posts were deleted. The Globe article discusses people in their 80s, but doesn’t mention that the oldest American baby boomers are just turning 78 (Canadians are two years younger) and the vast majority of them are not going anywhere soon. If you think we have a problem now, you ain’t seen nothin’ yet. From the archives (apologies for dead links):

Baby boomers aren’t buying senior housing

Dan Moyle/ Flickr

From November, 2018. Canadians may argue that the situation is different due to immigration policies and housing demand.

Almost 20 years ago, Canadian demographer David Foot wrote “Boom, Bust and Echo,” in which he claimed that “demographics explains two-thirds of everything — whether the subject is business planning, marketing, human resources, career planning, corporate organization, the stock market, housing, education, health, recreation, leisure, and social and global trends.” One of the lessons in that book was to follow the baby boomers, the oldest of whom are now 72 and the youngest 58.

It may be a shock to young readers and marketers, but that’s not old. That’s why it is hilarious to read articles like the recent one in the Wall Street Journal titled Baby Boomers Are Living at Home. That’s Bad News for Senior-Housing Developers. Esther Fung writes:

It seemed one of the surest bets in real estate: build senior-housing facilities that cater to aging baby boomers who will require more care. The problem is, boomers haven’t much cooperated.

That’s because these developers didn’t look at the numbers, and they jumped the gun. Most people don’t go into senior housing until they are well into their 80s. But marketers and builders looked at all these aging boomers and thought, if we build it, they will come. But the baby boomers are still driving their cars and still going to work and some are still raising kids. They are simply not the demographic that needs this stuff. Yet.

The vast majority of people moving into so-called senior housing are the parents of baby boomers. And even they are not moving in as quickly as expected. According to Fung:

Seniors older than 80 are part of the so-called Silent Generation, which suffered through the Great Depression and World War II. Many remain more frugal and independent and resist moving into group housing, analysts say.

The majority of the oldest baby boomers won’t be knocking on the doors of senior housing for 10 years, and many of them for close to 20. Thanks to the decline in smoking, they are a lot healthier than people their age used to be. They are too young for senior housing.

By 2035, America will have a lot of old baby boomers. (Photo: U.S. Census Bureau)

It’s a fundamental demographic mistake that people are making everywhere. Everyone is surprised that the baby boomers aren’t moving out of their houses so millennials can buy them, but in fact, according to a recent survey, most boomers have no interest in selling their homes right now. Mark Fleming writes:“Approximately 85 percent of baby boomers surveyed indicated they are not planning to sell their home in the next year. The main reason, according to the survey, is that their current home meets the needs of their family.”

But follow that demographic bulge, and you see a very different story in 10 to 15 years. Two studies quoted in the Washington Post see a huge bust coming down the road.

Fannie’s study estimates that from 2016 to 2026, between 10.5 million and 11.9 million older owners will end their ownership status. Between 2026 and 2036, another 13.1 million to 14.6 million will do the same. This massive and unprecedented generational unloading of houses could be “negative for the home sales market,” the Fannie study warns, because the upcoming generations of buyers may not have the financial capacity — or desire — to absorb the large numbers of homes coming to market.

Planning professor Arthur Nelson predicts a housing crash, with prices dropping “a quarter or a third or more.” And most of those baby boomers are going to need that equity from their houses to pay for the expensive senior housing they will have to move into at some point. Will this lead to suburban bargains for millennials? Not necessarily. From the Post:

This massive and unprecedented generational unloading of houses could be “negative for the home sales market,” the Fannie study warns, because the upcoming generations of buyers may not have the financial capacity — or desire — to absorb the large numbers of homes coming to market.

I know I sound like a broken record here, (remember those?) but as I wrote in It won’t be pretty when the boomers lose their cars or The issues for boomers won’t be ‘aging in place‘, in 10 or 15 years, the problems we face in transportation and urban design are going to be significant, and we should all be planning for it now.

Yet in all the discussions about infrastructure, what are the politicians planning to spend money on? According to CNBC:

Infrastructure could be one of a few areas of partnership between Democrats and Republicans, with members of both parties calling for improvements to the country’s aging bridges, roads and airports. Ever since Trump announced his bid for the White House, he has lambasted what he’s categorized as “horrible infrastructure problems” throughout the United States.

They might want to look at that demographic bulge and start planning for what 70 million 85-year-olds need, and it won’t be highways — it will be safe sidewalks, better transit and reconfiguring our cities so that older people will be close to doctors and shopping and things they need without having to drive there. They might want to think about rebuilding suburbia instead of airports.

As planner Tim Evens pointed out, we don’t need aging in place, we need places to age.

If boomers aren't budging, where will millennials live?

From May, 2019

North Americans love their single-family houses. And why wouldn't they? They provide privacy, lots of parking for cars so it's easy to drive to the mall or the doctor. It works wonderfully, especially if you bought your house 30 years ago for a fraction of its current value. That's why so few baby boomers are selling their houses; as long as they can drive, why would they?

That's creating a real problem for young people, especially millennials trying to buy homes. They're now as big a generation as the baby boomers, but new housing is too far out and takes a lot of time to get approved and built. There are lots of existing houses, but the baby boomers are staying put and not putting them on the market — even after their kids have left home. They are grossly over-housed, but hey, they own it and they're keeping it.

According to Bloomberg columnist Conor Sen, the people most affected by the housing bust 10 years ago were younger, Gen X types who bought at the peak of the market. Older homeowners bought their houses long before and were able to ride through the crash. Today, "homeowners over the age of 55 currently own almost 42 million homes, making up 53 percent of all owner-occupied houses in America." And they aren't ready to sell.

Downsizing for older homeowners, to the extent it happens at all, doesn’t begin until age 75 or so. The oldest baby boomers are just now hitting that age. We probably won’t see significant amounts of housing inventory from baby boomer downsizing until the latter part of the 2020s, which is sure to frustrate buyers looking to enter the market before then.

Not in my backyard

That's not the only thing that's frustrating. Once the baby boomers are in their houses and happy, they do everything they can to prevent anyone else moving in. A recent study looked at 97 cities and towns in Massachusetts and found that new housing was almost impossible to get approved due to resident opposition. Katherine Levine Einstein, David M. Glick and Maxwell B. Palmer explain:

Many types of housing proposals require public hearings which solicit input from neighborhood residents. This is by design. After the excesses of urban renewal, many localities turned to neighborhood-oriented processes as a check against developer dominance. But, like many participatory institutions, these land use forums may be vulnerable to capture by advantaged neighborhood residents eager to preserve home values, exclusive access to public goods, and community character.

And the people who show up at those meetings? "They are 25 percentage points more likely to be homeowners. They are also significantly older, more likely to be longtime residents, and male. They are nine percentage points more likely to be white."

The meeting minutes show that these participants are highly effective neighborhood defenders. They are largely united in their opposition to new housing development, and frequently present themselves as prepared experts. They often persuade local planning and zoning officials to deny projects, or, at a minimum, delay developments by a few months with demands for more traffic or engineering studies. Other times, they threaten or actually file lawsuits, which can delay housing developments by years.

Many of these neighborhoods are near transit, the kinds of places where there should be intensification and development of housing of all kinds. Because in 10 or 15 years, where are all these baby boomers going to live?

Many of them are probably thinking that they'll be able to cash out with enough money to find a nice apartment or retirement residence in the neighborhood where they've always lived. Except the baby boomer cohort is so large that it has always moved markets. When they all start selling at once, they may well cause housing prices to drop significantly. This is happening now in wealthy Greenwich, Connecticut, where according to the Wall Street Journal, rich New Yorkers are moving back to the city and other residents are downsizing to Florida. One rich ex-resident famously said "You can’t give away a house in Greenwich."

So young people can't get houses because the boomers won't sell, they can't get apartments because the boomers won't let anything get built, and then in10 years, the boomers are probably going to be stuck in houses they can't sell and have nowhere to move anyway because they fought every new development.

This is the mess we have created.