Downsizing Boomers to Fuel Apartment Market
Millennials may be a big driver of multifamily housing now, but baby boomers looking to downsize are expected to drive apartment growth over the next few years, according to a study by the Kansas City Federal Reserve. They found that older Americans are “increasingly downsizing” to apartments.
In general, the downsizing activity usually occurs around the age of 70 and becoming increasingly prominent by age 75, writes Kansas City Fed senior economist Jordan Rappaport. By next year, the oldest baby boomers will turn 70. The number of Americans aged 70 and older will increase by more than 20 million in the next 15 years, according to Census Bureau estimates.
"In consequence, multifamily home construction is likely to continue to grow at a healthy rate through the end of the decade and thereafter remain well above its level prior to the housing crisis," according to the report.
However, the report also notes that builders will need to take steps to adapt to the type of multifamily units they’re building to better appeal to the baby boomer segment. While millennials have shown a preference for compact, urban spaces, older adults tend to want more space and amenities, according to the report.
Source: “Baby Boomers Will Drive Demand for Apartments, U.S. Fed Study Shows,” Reuters (June 23, 2015)