Earlier in June, Freddie Mac reported that the 67 million baby boomers and other homeowners over the age of 55 control two-thirds of the nation’s aggregate home equity and therefore are in a position to greatly influence the direction of housing market over the next decade.
According to a new Freddie Mac 55+survey (polling 6,000 homeowners and renters born in 1961 or earlier), approximately six million homeowners stated they would prefer to move at some point and rent instead of owning. Nearly as many renters age 55 and over said they would prefer to move out and continue renting. More than five million of those said they are likely to move and rent by the year 2020, according to Freddie Mac.
The survey found that more than half (51 percent) of homeowners 55 and over preferred renting over owning. Also, the majority of those surveyed who currently rent (71 percent) and own (83 percent) said that they expect their next rental home will cost the same or less than where they currently live.
“When a population this large expects to move into less expensive rental housing, we have to expect it will create significant new pressure on both the supply and cost of existing affordable rental housing,” said David Brickman, EVP, Freddie Mac Multifamily.
Affordable rental housing will likely play a key role in determining who moves and when among the baby boomer crowd. Close to half (47 percent) of survey respondents who rent said that sometimes they struggle from paycheck to paycheck. About 13 percent said sometimes they could not afford basics until their next check arrived, according to Freddie Mac. Sixty percent of respondents listed affordability as a “very important” factor when choosing where to rent; 44 percent said they want to live in a place where they do not have to perform property maintenance; and 43 percent said they want to live in a walkable community, according to Freddie Mac.
However, 38 percent of respondents said they did have enough money beyond each paycheck—including money to put into savings, and more than half of respondents (59 percent) said they believe it makes sense for people their age to rent, Freddie Mac reported.
The Five Star Institute recently formed the Single-Family Rental Association, a Five Star member organization focused on responding to business opportunity and industry betterment in the evolving real estate landscape. Five Star’s Second Annual Single-Family Rental Summit will be November 1 through 3 in Frisco, Texas, presenting the premier education and networking event for private equity, REIT, institutional/bank, and small/mid-sized investors.