The Benefits of Renting to Baby Boomers
An older generation of renters could be on the horizon for multifamily. Are baby boomers the better investment?
The last thing any apartment owner wants to see inside a unit is a Hangover sequel produced by irresponsible renters. Let’s face it, some people who rent don’t treat their homes like they would want to be treated.
The Downsizing of America charge led by baby boomers perhaps opens opportunities for landlords to have their rent and eat it, too. These are presumably a more responsible lot – they’ve raised their children, achieved their corporate standing and climbed their social ladders – and are less likely to head-butt walls. They’ll probably leave the place much like they found it.
They are also more apt to take out renter’s insurance, suggests industry research.
Changing demographics of apartment renters is creating more demand for renter’s insurance, according to an IBISWorld study released last fall. The new breed of apartment resident has transformed in the last five years from younger, more budget-conscious to working professionals and middle-aged consumers. And, says IBISWorld, they are more likely to hold some sort of property and casualty insurance.
It’s not just baby boomers trading in suburban estates for a plot of urban-ia to either simplify their lives or live more on the edge, either. New renters emerged from the recession by virtue of previous homeowners who may have learned to appreciate having an umbrella over their things – even if it was at behest of the mortgage company.
Because of these factors, the renter’s insurance industry has realized an annualized growth rate of 4.5 percent in the five years to 2013, says IBISWorld.
Apartment industry has another reason to embrace baby boomers
It only supports why apartment industry executives have another reason to embrace the evolving aging of population. Baby boomers are entering their golden years and appear to be hanging around longer than previous generations. The rate of people over 65 and 75 is growing, and becoming a desirable demographic for the apartment industry.
Marketing strategies directed toward baby boomers seeking to downsize to apartments have been discussed at length at conference tables throughout the multifamily housing industry. At January’s National Multifamily Housing Council meeting in Palm Springs, conversations rang of the urbanization of baby boomers. “The Boomers are Coming! The Boomers are Coming!” harkened an NMHC follow-up blog.
Reports showed that 30-35 percent of new construction is being consumed by empty-nesters, and that research shows that 60 percent of renter household growth is from people 55 and older.
“We found through our research that the market is absolutely there and they are downsizing,” said Ricardo Rivas, CIO of Allied Orion Group, in NMHC’s recap.
Some baby boomers are trading in spacious suburban homes aren’t sacrificing much in terms of style. NMHC reported that several apartment firms are seeing demand for penthouse units by empty nesters.
The bar of apartment living is being raised.
Residents who invest in themselves are good for landlords
This is a unique demographic that demands attention and nurturing, says best-selling author Dr. Ken Dychtwald, who addressed industry leaders at a special executive session in Palm Springs. Today’s generation of older residents is much different, and the apartment industry should understand that.
One reason is that baby boomers are sticking around longer and are refusing to grow old the way their parents did. The idea of retiring and living on the family farm isn’t as appealing. Also, because they are living longer – the average life expectancy for a 65-year-old is another 18-20 years – more than a third who are 65 or older have a part time job. Many want to re-invent themselves and learn new things, and they want to live the rest of their lives on their own terms.
“If you build housing for the last generation of old people, you’re probably missing the mark.” The apartment industry, Dychtwald said, should capitalize on the longevity marketplace.
As some see it, that creates a golden opportunity for an industry that has depended largely on younger generations of renters who may be living paycheck to paycheck and are not risk-averse. Residents who desire fulfilling lifestyles and invest in themselves are good assets for the apartment industry.
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