A phenomenon is going to strike the real estate business sooner than we think. Baby boomers, people who were born between 1946 to 1965, are actually facing a downsizing dilemma. With most of their children working or settled in their own spaces near their workplaces, they must downsize their home to live comfortably in their older years.
The baby boomers' dilemma is expected to affect the housing industry as they represent a major part of society. As reported by CNN, baby boomers account for almost a quarter of the U.S. population. In 2011, their population hit almost 77 million. Aged between 50's and nearing 70's, a cost-effective retirement place is considered to let them live comfortably in their retired years.
According to CNBC, some of these baby boomers who lived in the suburbs -- worked there and raised a family -- now want out to get out and have a taste of the city life. The reason, as told by Betsy Friedlander, 66, and Mike Klipper, 67, in the CNBC report, is that it will be easier and more convenient for them. All the necessities, such as drugstores, shops, grocery stores, restaurants and hospitals, would be nearer.
Seems like a perfect and simple plan, or so one may think. Unfortunately, most of these baby boomers are shocked beyond belief after knowing that their perfect plan is not as perfect as initially perceived.
The condominiums in the city are so small, just averaging below 400 sq ft., and yet so expensive. A typical one bedroom condominium costs about 1 million dollars. An example of this is one of the rising Micro NY apartments ranging from 250 to 350 sq ft. for rent with an approximate $3,000 rate.
The price tag is quite high for a price of comfort and the size would be quite an adjustment from suburban homes which range from 2000 to 3000 sq ft.
If baby boomers were to let go of their suburban homes and sell them to buy one of these units in the city, they may not be able to afford to continue living the "perfect" lifestyle. This may not be the comfortable life someone could dream of, after all. A big chunk of the money gained by selling their nests back home, will then be allocated to buy their urban home.
If lucky, there will be a small amount for them to put in savings for health care and living allowance in their retired years. Unfortunately, if they will have to add more to pay for the difference, it is not a practical idea, anymore, as it will not be sustainable.
Another stumbling block is selling their homes. Suburban homes may not be easy to sell in the coming years as noted by Forbes. It reported that Gen Xers (born between 1961 to 1981) and Millennials (early 1980s to early 2000s) have problems of their own from being exposed to great financial crisis to high unemployment rate. With higher unsold suburban homes, these houses will depreciate in time.
With such regret, baby boomers couples interviewed by CNBC see themselves just staying where they are. However, they could change their attitude towards it on a happier note and follow experts' advice in living these years ahead.
Co-housing advocate Jennifer Ryan, during her CNN interview in 2012, relates that co housing is an alternative living for baby boomers. This again will make neighbors and friends have a shared and closer community bridging in generation gaps. A known baby boomer and former "Today" co-host, Jane Pauley, tells baby boomers to focus on their years to come and embrace this "exit" gracefully.
