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Published On: Tue, Aug 11th, 2020

How Retiring Baby Boomers Will Change The Real Estate Industry

A Quick Summary

  • Baby Boomers possess about 70 percent of the US’ wealth, so changes to their spending and investing habits can have profound implications for the whole economy or individual sectors.
  • As more and more Boomers retire over the next 10 or so years, we can expect to see rising demand for certain businesses, such as hotels and leisure-based facilities.
  • This will, in turn, lead to increasing property prices for these types of facilities.
  • We have already seen this trend over the past decade when the first wave of Boomers started to enter retirement. 
  • Although the “Silver Tsunami” is likely to be further away than some people realize, governments and private healthcare providers must begin preparing for it now, as it will take many years to increase capacity by the required amount. 

It’s a well-known fact that Baby Boomers control most disposable wealth in the United States, so changes to their spending habits and investment portfolios can have broad implications for the shape of certain industries and the US economy as a whole. 

The real estate sector, in particular, is one that’s likely to be greatly influenced and potentially reshaped by Boomers retire over the next decade or so. 

photo 401K 2012/2013 via Flickr

How Might Boomers Change the Real Estate Industry?

Analysts are expecting certain areas of the real estate industry to change quite profoundly as Boomers enter retirement and alter their spending habits. 

For example, hotels and leisure-based properties, such as country clubs, are forecast to surge in value over the coming years as demand for them grows in response to millions of Boomers entering retirement. 

We’ve already seen this happen since around 2011, when the first wave of Baby Boomers started to retire and began spending more time and money at such facilities. So, there’s no reason to suggest this trend won’t continue as more Boomers retire.

Keep in mind that this trend is by no means exclusive to the US – many other developed countries have also seen this increase in demand as their retired populations has grown. 

What Does This Mean For Landlords & Developers?

Opportunistic property developers and landlords should bear this trend in mind to maximize their returns over the next few decades. 

With Boomers controlling so much of the US’ wealth and their spending expected to increase considerably as they entire retirement, with many of them set to spend their savings instead of passing it on to their children, there’s a huge opportunity for the real estate sector to cash in on.

Investing in properties and businesses which are in strong demand among Boomers is a sound strategy if the performance of such ventures since 2010 is anything to go by.

What About the “Silver Tsunami”?

The so-called “Silver Tsunami,” which refers to the world’s aging population and the associated increase in healthcare spending, among other things, is further away than many people realize. 

This is because most Boomers won’t reach their 70s and 80s for another 10 to 20 years, which is when we will see a marked increase in healthcare demand and spending.

However, while this sounds like a long time away, it will still be challenging for governments and private health and personal care providers to scale their capacity to the required level in time. 

So, the importance of preparations being made as soon as possible cannot be overstated. 

Author: Jacob Maslow

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