Baby boomers, millennials will drive housing decisions
By Jim Weiker The Columbus Dispatch
Baby boomers, that huge troop of Americans born between 1946 and 1964 who have held center stage for decades, aren’t quite ready to abandon their leading role.
The housing decisions that boomers will make, both as buyers and sellers, will dramatically shape central Ohio housing for the next two decades.
“In 20 years, 20 percent of the U.S. population will be 65 or older, and it will be higher than that in Columbus,” said Rodney Harrell, director of AARP’s livable-communities program.
“We now have to start understanding that older adults are a key part of our population. But we haven’t been planning for them. … There’s simply not enough housing designed for people to age in comfortably.”
Between now and 2030, an estimated 56 percent of new central Ohio households will be headed by downsizing baby boomers, said Arthur Nelson, a professor of urban planning and real estate at the University of Arizona.
“The next wave of demand will be households with residents 65 and older,” Nelson wrote in a 2014 analysis of the Columbus-area housing market.
Where will those boomers want to live?
“I want to be in the same place,” said Joanne DeGroat, a 66-year-old retired Ohio State University professor who lives in a two-story home in Westerville. “I love where I live.”
Most boomers agree. An AARP survey found that 87 percent of people 65 and older want to stay put. For those slightly younger (50 to 64), the figure is 71 percent.
“We know some move to Florida and elsewhere, but many want to stay in their communities,” Harrell said. “They’re near their church, their friends and families, their parks, their stores.”
In fact, in a panel discussion recently assembled by The Dispatch, none of the seven baby boomers, including DeGroat, mentioned wanting to live in Florida, a Downtown high-rise or a retirement community 20 years from now. All said they wanted to still be in their homes.
The idea of boomers shoving off to another home the moment they retire is a myth, said Chris Porter, vice president and chief demographer with John Burns Real Estate Consulting.
“We used to think as soon as you turn 65, you pack up and move. But that’s not really the case,” Porter said. “The highest rate of moving is actually in the family-formation years.”
Still, many baby boomers acknowledge that in 20 years, when they are in their 70s, 80s or even 90s, things might look different. Their second-story bedroom might not work. Driving might get harder. Isolation could become a concern.
“I live in a 120-year-old home with narrow and steep stairs,” said Daniel Downing, a 54-year-old communications specialist at Nationwide who lives in Victorian Village. “My concern is getting up and down those stairs in 20 years.”
Teresa Horstman, also 54, loves her 15 acres with a horse barn between Galloway and West Jefferson but knows that in 20 years “it may not make sense.”
Some of the boomers’ practical concerns can be remedied through remodeling. AARP estimates that only 1 percent of U.S. homes have the five features necessary to allow seniors to age in place: single-floor living, a no-steps entrance, wide hallways and doors, accessible light switches and outlets, and lever door handles.
Consequently, “aging-in-place” renovations are expected to become an enormous part of the home-remodeling industry in the next two decades, as contractors add those features to make homes work for seniors.
Still, more than 100,000 central Ohio boomers are expected to sell their homes in the next 20 years, dramatically altering the supply of family homes available for purchase.
Boomers will unload so many large single-family suburban homes on large lots that the Mid-Ohio Regional Planning Commission concludes that builders won’t have to add any more such homes before 2050.
Demand is expected to especially shrink for high-end suburban homes, which already struggle to find buyers.
“In our opinion, Tartan Fields, Muirfield, Wedgewood will never come back. Those homes will be worth less and less and less,” said Brent Crawford, a principal in Crawford Hoying, the development firm building the Bridge Park mixed-use project in Dublin.
Some of those baby boomers will head to apartments and condos in dynamic urban areas, but not many, predicted Philip Fankhauser, president of Columbus-based Epcon Communities, one of the nation’s largest builders of empty-nester patio homes.
“We have learned that while there are good numbers of boomers who are enticed by the move into the urban center, to buy a condo Downtown or move to German Village, the vast majority of boomers still want to live in a suburban area,” he said.
“There won’t be this inner-city flight in huge numbers.”
Gary Bennett understands. He and his wife, Kristin, have kicked around the idea of moving from their large Northwest Side home but wouldn’t consider an apartment.
“I lived in an apartment when I was a kid,” said Bennett, 57. “I’m not sure I’d want to go back to that.”
Several builders, including Epcon, Pulte, M/I Homes and Redwood Living, have scrambled the past few years to build patio homes for central Ohio empty nesters. Such projects are expected to grow in popularity in the next two decades, but they now remain hard to find in price ranges and places many retirees want.
Some empty nesters are instead turning to homes that are likely to be in huge demand over the next 20 years: smaller houses in established neighborhoods.
A few years ago, several years after their children left home, Sandy and Jim Oppermann decided to move from their 2,400-square-foot, two-story home near Worthington. They eventually settled on a 40-year-old, 1,700-square-foot three-bedroom ranch in an older Westerville neighborhood.
“It took us 2 1/2 years to find what we wanted,” said Mrs. Oppermann, 68, who is retired from Lutheran Outdoor Ministries in Ohio. “We looked in Westerville, Worthington. There just aren’t a lot of ranch houses that don’t need fixing.”
They paid $225,000 for the house — less, she said, than they would have paid for many of the new patio homes they considered.
In addition to apartments and patio homes, dozens of retirement communities have opened or are underway in central Ohio to cater to empty nesters. Even though such communities can come loaded with amenities, for the most part, few seniors seem to want to live there.
“If I’m old and sick and need a retirement home, I hope there’s one there,” said Estelle Scott, an active 70-year-old in Upper Arlington. “But I don’t want to be around old and crotchety people. I want to be around young people.”
Nonetheless, thousands of seniors end up in retirement homes because they see few other options.
The AARP's Harrell and others would love to see that change with more innovative senior-living arrangements.
Harrell sees promise in adding apartments to larger homes, either for companions to help take care of the elderly, or for the elderly themselves to live independently of, but next to, their loved ones.
Another idea he likes is shared housing, in which those in need of assistance rent space in their home to someone able to provide it.
Along similar lines, builders are adding more first-floor suites to new homes to accommodate aging boomers, either in their own homes or in their children’s homes. In a recent survey, John Burns Real Estate Consulting found that 44 percent of homebuyers expect to house an aging parent one day.
“More parents are OK with that than they were in the past,” said company vice president Porter. “In fact, most parents say they enjoy it as well.”
Though municipal rules can discourage or prohibit such innovations, those who study the market say housing has to adjust to accommodate a wave of boomers.
“I see changes that none of us anticipated and planned adequately for,” said Epcon's Fankhauser.
“By none of us I mean homebuilders, Realtors, city planners and municipal officials. Very, very few of us are prepared for the change. That doesn’t have to mean doom and gloom, but it means we have to step up and stay educated and smart, and make changes in our business models and the way we do business.”
Millennials say they want to buy homes, but not as quickly as parents
In the future, all millennials will rent apartments Downtown, right?
Wrong and wrong.
In fact, 65 percent of millennial households in central Ohio already live in suburban settings, according to an Urban Land Institute analysis. Nationally, 85 percent of homes bought by millennials last year were outside urban centers, according to the National Association of Realtors.
And most of those who haven't bought a home yet will one day. Several surveys conclude that about 80 percent of millennials plan to own homes. They buy later than their parents because they marry later, have kids later or can’t afford to buy yet.
“Overwhelmingly among non-owners, homeownership is part of their future,” said Jessica Lautz, managing director of surveys for the Realtors’ association. “They just can’t obtain it now. The most common reason is affordability, and they also want the flexibility of renting now in this time of their lives.”
About 600,000 millennials — born between 1982 and 2004 — live in central Ohio. As they age, two key questions will shape their impact on Columbus-area housing: Will they be able to afford to buy? And if so, what will they buy?
In a survey of 24,000 millennials who now rent, Apartment List found that 72 percent said they can't afford to buy. Even in central Ohio, which is more affordable than many markets, 66 percent of renting millennials said they cannot afford a home even though most would like to buy.
Columbus-area millennials who rent reported that they had saved an average of $2,360 toward a home — less than 10 percent of the amount recommended for a down payment on a median-priced home.
Julie Dompa, who rents a German Village apartment, expects to buy a home one day but said she isn't financially in a position to now.
"Cost plays a huge role and is a big deterrent to people my age and those I hang out with in buying a home," said the 30-year-old who works in a Downtown IT staffing and consulting firm. "I foresee renting longer than I wanted."
If she does buy, Dompa said she would like a home in a dense, older neighborhood. Her first choices are two city neighborhoods, German Village and Clintonville, but she also likes Bexley.
"They are all within (Interstate) 270, which is important," she said. "I like that they are close to Downtown and the campus area and are communities that have been around for a long time, not cookie cutters. There’s history and architecture there."
Housing researchers have moved mountains trying to figure out where millennials such as Dompa will purchase.
As the Realtors' data show, most who already have taken the plunge bought outside the central city. But in central Ohio, that can mean everywhere from Clintonville to Canal Winchester, Grandview to Groveport, Westgate to Westerville.
For some experts, the answer seems clear: Once millennials marry and have kids, they will more or less buy the house that their parents bought.
“Preferences have stayed relatively the same throughout the years: good schools, a nice-size home, the best home they can afford, a yard,” said Svenja Gudell, the chief economist with Zillow. “Those things will stay the same.”
Rose Quint, assistant vice president for survey research with the National Association of Home Builders, agrees.
“Based on data we have from surveys … millennials won’t be behaving that much differently from previous generations,” Quint said.
But other evidence suggests that millennials will not simply be boomers 2.0. Though most are likely to end up in the suburbs, they might not want the same Brady Bunch burb as their parents did.
“Ultimately, people will move to the suburbs for schools, for yards,” said Chris Porter, vice president and chief demographer for John Burns Real Estate Consulting.
“But … we see demand for what we call ‘surban,’ the best of urban living in a suburban environment … with walkable main streets, retail shops, restaurants, mini-downtowns in a suburban environment.”
A 2014 Urban Land Institute survey found that 46 percent of millennials prefer to live in an urban location, the highest percentage of all age groups. Another survey, by the National Association of Home Builders, found that though 51 percent of baby boomers do not want to live in a "high density" neighborhood, only 35 percent of millennials opposed the idea.
For many millennials, "high density" and "suburban" aren't incompatible. Central Ohio is full of neighborhoods that might technically be in Columbus suburbs but offer the walkability, transportation opportunities and commercial amenities of an urban lifestyle.
When Tyler Doerschuk and his wife, Robin Edmonds, moved back to central Ohio from Chicago three years ago, they wanted a walkable neighborhood to raise a family. They looked in Clintonville but last year bought a 1,558-square-foot, 1 1/2-story home in Worthington, a short walk from North High Street restaurants.
For Doerschuk, this is an urban lifestyle.
“Worthington is an urban area,” said the 30-year-old software developer for AEP. “This is close to everything. You can find that walkability in the suburbs.”
That desire for walkability and for relationships within a community are key ingredients in the millennial stew, said Chris Rockwell, president of the Columbus-based consumer-behavior research firm Lextant, which manages the Millennial Project, a deep exploration of millennial behavior and values.
“I don’t think that just because they have kids they’ll want to go dig dirt in the suburbs," Rockwell said. “They want to stay connected.”
For some millennials, the desire to be connected means housing is more than a practical consumer question. It’s a political or even an ethical question.
Ghofran Miari, a 24-year-old teacher in a Columbus charter school who lives with her family in Dublin, has started thinking about buying her first house. She’s checking out the Milo-Grogan neighborhood, east of Italian Village and south of the Ohio Expo Center.
“I want to be part of a neighborhood that reflects where my students live, where I know the people,” she said. “I want it to be walkable, centrally located, affordable and diverse.”
She also expects to live in a smaller home than the home she grew up in.
“Does a childless couple really need a three-bedroom home?” she asked.
Blake Waits and his wife, Nikki, wonder the same thing. The couple rent an apartment in New Albany and have started to shop for a home.
“I don’t want a McMansion,” said Waits, 34. “We’re looking for a smaller house, but we also want green space.”
The two are focusing on Gahanna because they expect to have children one day and like the Gahanna school district.
Children introduce a monumental equation into the home-buying decision. In fact, a Zillow survey found that almost 9 in 10 home shoppers with children prefer a single-family home, and are more likely to buy in the suburbs than in the country or city.
And though some Columbus neighborhoods on the Northwest Side and in Berwick, Westgate and Clintonville are popular among families, children remain rare in more urban neighborhoods that are big with millennials, such as German Village, Olde Towne East and Victorian Village.
“You can define the urban market by what it’s not,” said Brian Ellis, president of Nationwide Realty Investors, which has developed both mixed-use urban projects and large-scale suburban communities.
“It’s really not families with school-age kids for the most part. When you raise kids in the Midwest, you want to have a backyard and swing set and a more traditional family home.”
But millennials also enjoy proximity to amenities, which is likely to favor those central Ohio suburbs that are denser and closer in, and that include a mix of stores, restaurants and offices.
"What's important for millennials is the way the house allows them to interact with families and create social situations for themselves," said Bart Overly, a partner in the Columbus firm Blostein/Overly Architects.
"They don’t seem very interested in the generic suburban condition anymore. It will be interesting to see how that generic subdivision will transform going forward."