ó Baby boomers are altering the American Dream.
having the home in the suburbs, the kids, the two cars,
and maybe even the picket fence, a growing number now
want to ride elevators to rental apartments and walk out
the door to restaurants. When the kids are grown, an
increasing number of empty nesters are selling homes and
aspiring to live like urban millennials ó in rental
buildings full of amenities and free of lawn mowing,
shoveling, mortgages and property taxes.
not unusual for empty nesters to consider downsizing and
avoiding tasks such as yard work. But typically
downsizing has meant buying smaller homes or condos.
Now, for a generation with a reputation for setting
trends and yearning for freedom, an increasing number
want to rent rather than own.
nice to have freedom," said Michel Winkelstein, who
moved into a downtown Chicago apartment with his wife,
Susan, after selling their suburban home about three
years ago. Michel Winkelstein now walks to work at his
law office, and Susan Winkelstein says she feels like
sheís on vacation every day. Apartment living frees up
time spent on maintenance and they walk to restaurants,
plays, movies and musical events.
both feel like we are in our 20s," said Michel
number of boomer renters is still small. But there were
just 10 million in their 50s and 60s in 2005, and in
2015 there were 15 million. They account for more than
half of the nationís renter growth in the last 10
years, according to Jennifer Molinsky, researcher for
the Joint Center for Housing Studies of Harvard
calls it a "dramatic increase," and a trend
thatís likely to continue as the giant generation of
77 million people, born between 1946 and 1964, ages and
seeks easy living.
a recent National Multifamily Housing Conference,
housing consultant Jeff Kottmeier was surprised by
"landlord after landlord mentioning the surprising
surge in older renters." Many of the boomers have
sold homes and have been looking for luxury apartments
in walking distance to stores and entertainment, said
Kottmeier, of John Burns Real Estate Consulting.
many metro areas, older renters are driving demand, he
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Chicago, consultant Lance Ramella, of John Burns, said
he canít quantify the extent of the trend, but it is
observable. There is an increase in people "who donít
see their primary residence as an investment" and
donít want their retirement money tied up in a home,
he said. In Illinois, with the stateís unresolved
pension problems, people say they are afraid of buying
because they fear rising property taxes, he added.
is a unique twist for many boomers, who began their
adult lives when the sheer size of their generation
starting households drove a sharp climb in home prices
in the í70s and í80s. For years many assumed renting
was a waste of money and a home an essential investment.
But after living through the recent housing crash, that
assumption has been tarnished and renting now seems
arenít going to get equity quickly any longer,"
Michel Winkelstein said. As empty nesters, he and his
wife sold their three-bedroom home, for less than they
had paid for it in 2002, and considered buying a condo
downtown. As they debated location, they worried about
real estate agent, Karyn Meyers, suggested renting as a
short-term experiment that would allow them to move
easily, and without selling costs, if they changed their
minds. Now Winkelstein said he has no urge to move.
most boomers are not regarding housing much differently
than the generation before them, said Lawrence Yun,
economist for the National Association of Realtors. The
number of boomers renting is impressive simply because
the generation is large, but there does not seem to be
an increase in the percentage renting compared with the
previous generation as they entered retirement, he said.
percent of boomers own homes and want to be owners, he
said. In a study by AARP, 74 percent said they wanted to
continue to live in their homes throughout retirement.
Like their parents, boomers are inclined to stay in
their homes after the children are grown, and welcome
them back around the dinner table theyíve shared for
homeownership among people 50 to 64 slipped 5 percentage
points between 2005 and 2013, notes Molinsky. Part was
driven by foreclosures and job loss in the recession.
Others are "transitioning to renting as a
choice," she said. They want "cost-effective
options that demand less time, physical effort and money
to maintain." As people enter their 70s, she
expects the desire for ease and safety to intensify.
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combination of 8 million foreclosures and a 10 percent
unemployment rate during the housing crash and Great
Recession sparked a surge in rentals among all age
groups during the last few years and has caused rental
rates to soar. There are 19 million renters who
previously owned homes, according the Urban Institute.
But older boomers were not as hard-hit in the housing
crash as people ages 36 to 55, because people in their
50s and 60s tended to have purchased homes before the
housing peak and therefore had more equity to absorb
losses, the Urban Institute has found.
a tight rental market now, given the increase in
renters, Molinsky notes there has been little interest
in developing affordable housing for those who need to
rent due to economic weakness. Rather, the interest in
potential boomer renters is coming from developers
seeing opportunity in the luxury market.
parents are also being tempted to rent as they see the
housing their children are considering in new luxury
buildings, said Randy Fifield, vice chairman of the
Fifield Companies, which develops apartment buildings.
see the light and the view, and they are jealous,"
said Fifield. "They want a vibrant life"
instead of isolation in empty homes in quiet suburban
neighborhoods. "They are busy with their phones and
iPads, and can live in a new building for less than a
mortgage and stop writing checks to the handyman and the
landscaper. They donít have to worry about the
Howard Pearl was attracted to that life after his
children left home. The family home in suburban Chicago
"was a great place to raise a family," he
said, but when he was alone he didnít want "a
sleepy family town. There were no restaurants or
theaters." So he moved into the E2 Apartments in
the more-bustling suburb of Evanston, which he says is
vibrant like the theme song from TVís
"Cheers": "Everybody knows your
rather than trying to figure out how to get home for a
package or delivery, thereís a concierge, he said.
When he wants to leave town, he simply locks the door
and leaves, and he notes "rather than paying
thousands for insurance, Iím paying $300 to
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luxury buildings in downtown Chicago have been
especially popular with empty nesters craving activity,
Ramella said boomers are also renting near suburban
areas where they raised families. They want to continue
ties with churches and communities, he said.
in Chicagoís downtown is beyond the typical boomerís
budget. The new luxury buildings in Chicago run about
$2.81 a square foot, or $2,800 for 1,000 square feet,
according to Appraisal Research Counselors. Many units
are 700 to 800 square feet and are geared toward single
millennials. Boomers typically want larger apartments so
their children can visit and they can entertain. Boomers
seeking two-bedroom rentals in downtown Chicago will
face rents averaging $2,670, according to Jay Board,
national market analyst for MPF Research. Three bedrooms
the average household income of people 55 to 64 is about
$75,240, according to the Bureau of Labor Statistics.
That means rent of about $1,880 a month would be
recent trend in building in Chicago and other areas of
the country has been to construct luxury rentals. And
the trend is likely to continue, with more development
geared toward affluent boomers, according to the Joint
Center for Housing Studies.
vacancies remain low, prices have been climbing sharply.
Nationally, prices in new apartment units climbed 26
percent over the last two years, and thatís made it
"relatively easy" to get capital for new
construction, the Harvard researchers noted. But they
have raised concerns too. As boomers age, even those who
arenít being drawn to apartments now may need them,
more for accessibility and ease of living. Presently,
that type of housing at moderate and low prices is in