One interesting trend in rental demographics over the last few years has been profiled in several articles and we came across one in RentCafé recently. The new face of renters, especially in trendy, upscale urban areas, is actually…older faces – specifically those over 55 who are highly-educated and have the financial wherewithal to live wherever they’d like. Move over, Millennials, there’s another generation embracing apartments and they’ve seen a few more decades of life and experience. We looked at the changing face of renters and the reasons why retirees are opting for leases over mortgages.
Boom in Renting by the Baby Boomers
Hitting retirement age doesn’t mean more time spent in large yards and puttering around houses that have long been empty nests – baby boomers are flocking to the rental market, according to research on RentCafé and is up 28% just in the six years studied between ’09 and 2015. These actively-aging seniors tend to hold a Bachelor’s degree or higher, and despite being affluent enough to seek a new mortgage during a down-size, instead are looking at leases. To put the numbers in perspective, the age-group typically associated with renting (under age 34) increased by a scant 3% in the same time-frame. That breaks down to an increase of 2.4 million over age 55 and about .4 million under age 34! The increase in senior renters is higher in the suburbs, with RentCafé reporting a 39% increase in the over 55 demographic – although urban areas have also seen a spike in older renters, with a 21% increase in this group.
RentCafé noted that the senior rental population was growing the fastest in the metro areas of: Riverside, CA, Tampa, FL, and Phoenix, AZ – with Los Angeles seeing the biggest growth in older renters at 130,000 new senior households. Interestingly, RentCafé data shows that Phoenix and Denver appear to land the most highly-educated retiree renters.
Down-Sizing and Enjoying an Active Lifestyle
Not content to rest on their laurels and simply grow old, the busy retirees who elect to rent are decisively choosing their homes based on their lifestyles, family, and desire for more freedom. Many financially-comfortable baby boomers can find appealing apartment communities with plenty of modern amenities that make their golden years easier. Eliminating yard work, reducing house size (and house-keeping needs), and relocating to an apartment in a desirable location or near children or grandchildren is ideal for many retirees. Keeping up with the routine work that even a paid-off mortgage demands can still be a financial drain, and the peace of mind in renting is what many seniors currently seek. There’s also a financial element: in the current seller’s market, with potential rising interest rates, as well as the changing tax situation, many baby boomers just don’t see the same upside in trying to buy a new home or in maintaining ownership as in years past.
Multifamily real estate professionals will be seeing an increase in active, educated, and often more affluent seniors than in previous years. With so many reasons to rent, many baby boomers are choosing to ditch the mortgage and enjoy the freedom allowed with a lease – a trend that promises to continue.