With downsizing a significant trend for older Americans purchasing homes all cash, we break down the numbers.
Who are the buyers who are downsizing their homes and who are the ones purchasing in adult communities? The National Association of Realtors (NAR) tracks the information in its annual surveys and given that the trend of older Americans and retirees using all cash to purchase homes during the first quarter of 2014, it’s interesting to see who exactly that person is that’s downsizing and the ones moving to adult communities.
Here’s how it breaks down: For those downsizing (purchasing smaller homes), the median age is 60 and median household income is $83,700. In contrast, the median age buying what’s called “senior housing” or in adult communities is 64 and with a median income of $67,400. Among those downsizing, 73 percent bought single-family homes, 12 percent bought condos, 9 percent bought townhomes and 6 percent bought other units. Among those choosing adult communities, 58 percent bought single-family homes, 18 percent bought condos, 10 percent bought townhomes and 15 percent bought other units.
When it comes to downsizing, 98 percent are repeat buyers while 2 percent didn’t own their home. For those choosing adult communities, 26 percent were first-time homebuyers.
The median square footage of those downsizing and those moving to adult communities is right around 1,700 square feet. Those downsizing say the need for a smaller home was the No. 1 reason at 24 percent, followed by moving closer to their family and friends, 12 percent; job relocation, 12 percent and retirement, 10 percent.
For those who moved to adult communities 22 percent say it was the desire to own that prompted the move. That was followed by retirement at 18 percent; the need for a smaller home at 15 percent and the need to be closer to friends and family at 10 percent.
As for why people downsize, Walter Molony, the spokesman for the NAR, says the answer is simple. “When people’s kids have left the home and they no longer need a large family home, they may be getting tired of mowing the lawn and raking leaves and shoveling snow,” he says. “They’re seeking a simpler, easy to maintain lifestyle. In many cases, they may be purchasing a condo or townhome or they’re buying into a senior living facility or community of that nature.”
Molony says that there continues to be a lot of retirees and older Americans who want to be close to family and friends and purchase their new homes close to where they’re at now. Also, there’s always snow birds that want a different climate and who may have a home both in Sarasota and near their family in Cincinnati, he says.
“Downsizing is a trend and that will continue,” say Daren Blomquist, vice president of RealtyTrac, which tracks US housing market data. “That will ensure that hot spots for retirees—South Florida, Phoenix and Las Vegas, for example—will be in good shape for the foreseeable future because there will be a lot of retirees downsizing to those markets for sure.”