Baby Boomers in the Housing Market What’s Ahead in their Golden Years Azad Amir-Ghassemi | Research Analyst | C.A.R.

Online Only Survey conducted from January 2016- February 2016 Methodology Online Only Survey conducted from January 2016- February 2016 1371 Boomer respondents: ; 1100 Gen-Xers (33- 49) Respondent quotas were matched to Census ACS 2014 rates based on race/ethnicity, renter/owner occupied housing status Post-survey stratified weighting was applied due to male undersampling

Overview Baby Boomers: They’re Kind of a Big Deal (ACS Stuff) Basic demographics (share of population over time) Who owns the homes (share of owned homes) Who’s got the wealth (share of wealth) This is a big deal for housing too Long-term owners don’t want to move: Capital gains, property taxes, like their home, leave it to kids as affordability slips away… But some older boomers, with equity, with certain demogs. – do want to sell. Long-term renters can’t afford to buy: Down payment, access to credit, lack of supply, general affordability Many worried about or help take care of their kids Going both ways: some kids worried about mom and dad too Buckle up: this is likely a “new normal” for the market Implications for transactions moving forward Advice for members given this shift in the marketplace

Times are a changing but for now, Boomers are still the only game in town

Baby Boomers are driving an all time high number of 55 - 70 year olds 2,000,000 4,000,000 6,000,000 1980 1990 2000 2010 Year Population 1980 - Present California Population of 55-70 Year Olds Source: U.S. Census Bureau

55-70 year olds as percentage of total population is also peaking 0% 5% 10% 15% 20% 1980 1990 2000 2010 Year Percent 1980 - Present California Population of 55-70 Year Olds Source: U.S. Census Bureau

Home ownership of 25-44 yos shrinking, 55 - 70 continues to grow 2,000,000 4,000,000 6,000,000 1980 1990 2000 2010 Year Total per Age Group 18-25 25-44 45-54 55-70 Over 70 by Age Group Over Time; 1980 - 2016 California Home Ownership SOURCE : US Census Bureau - Current Population Survey

Yet, Boomers as a cohort - proportion of Population is falling 0% 10% 20% 30% 1990 2000 2010 2016 Year Percent Boomers as Total of California Population SOURCE : CA Department of Finance, Population Estimates

And so is the California Homeownership Rate 50.0% 52.5% 55.0% 57.5% 60.0% 1990 2000 2010 Year Percent California Homeownership Rate 'SERIES: Homeownership Rate for California [CAHOWN] SOURCE: US Census Bureau'

Homeownership Rate Follows Aging 40% 50% 60% 70% 80% 2005 2008 2010 2012 70 + 52-70 37-51 24-36

Boomers still own the most homes 0.2% 1.5% 24.2% 21.6% 34.1% 18.4% Under 18 18-25 25-44 45-54 55-70 Over 70 0% 10% 20% 30% 40% Percent Age Group 2016 California Homeownership by Age SOURCE : US Census Bureau - Current Population Survey

Wealth drives Purchases And the Median Net worth has changed since 1990 10.4 7.8 46.7 56.4 105.3 98.7 165.9 97.9 232.1 76.7 194.8 72.4 Less than 35 35 - 44 45 - 54 55 - 64 65 - 74 75 or more 100 200 300 Net Worth in 000's Age Group 1989 2013 1989 vs 2013 Median Net Worth by Age Group SOURCE : Survey of Consumer Finances

And the Median Networth has changed since 1990 6% 28% 63% 100% 140% 117% Less than 35 35 - 44 45 - 54 55 - 64 65 - 74 75 or more 0% 40% 80% 120% 160% Age Group Net Worth / Boomer Net Worth Age Group 2013 Relative Net Worth Compared to Boomers SOURCE : Survey of Consumer Finances

Original Purchase Price - Wide Difference Between Mean and Median 28% 15% 12% 17% 10% 7% 5% 2% 0% 20% 30% $0k - 100k $100k - 149k $150k - 199k $200k - 299k $300k - 399k $400k - 499k $500k - 599k $600k - 699k $700k - 999k $1000k + Per cent n: 760 mean : $392,100 median : $181,000 What was the original purchase price of the house? California Association of REALTORS®

Current Purchase Price - Wide Difference Between Mean and Median 9% 5% 6% 15% 14% 16% 8% 0% 10% $0k - 100k $100k - $149k $150k - 199k $200k - $299k $300k - $399k $400k - $499k $500k - $599k $600k - $699k $700k - 999k $1000k + Price Group Per cent n: 760 mean : $885,600 median : $420,000 What is the current value of the house? California Association of REALTORS®

Median Equity is $170k. 25% have less than $50k. Ie 1% 4% 18% 11% 17% 12% 16% 8% 0% 5% 10% 15% 20% <-$250k + -$249k - -$100k -$100k - -$50k -$50k - -$1 $0 - 49k $50k - $99k $100k - $174k $175k - $249k $250k - $399k $400k - $599k $600k + Equity Group Pct of Age Group Respondents n: 760 mean : $493,600 median : $170,000 Equity Current Value - Purchase Price California Association of REALTORS®

So what's the future? Searching for a new home?

Where is the inventory turnover? Long-Time Homeowners are not moving as in the past Low rate on current mortgage Low property taxes Capital gains hit Where can I afford to go? Could not qualify for a mortgage today Remodel and stay Are we headed for the “European Model” where children inherit the home of their parents? One more thing…Secular decline in marriage

Fewer Units Turning Over Since the Great Recession Housing Turnover Rate (Single-Family Homes only) SERIES: Percent of existing single-family homes being sold SOURCE: Census Bureau, American Community Survey, Moody’s Analytics, C.A.R.

Years Owned Home Before Selling SERIES: 2016 Housing Market Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®®

Boomers Not Moving as Often 71% of Californian’s aged 55+ haven’t moved since 1999 SERIES: Distribution of Home Ownership by Year Moved In SOURCE: U.S. Census Bureau, 2013 American Housing Survey

Average Number of Years in Current Residence - 16 8% 14% 9% 10% 12% 33% 0% 20% 30% < 1 years 1-2 years 3-4 years 5-10 years 11 - 15 years 16 - 20 years 21 to 25 years Per cent n: 1172 How long have you lived in your current home? California Association of REALTORS®

Owners Investing in Staying Put ? Another angle on low turnover—reinvesting in your current home for the long haul so you don’t have to move. The value of residential alterations/additions permits in California is at an all-time high through the first 7 months of 2016 compared with the first 7 months of any other year ever. Also accelerating this year—up 16% over last year and the strongest growth for the series this cycle. SOURCE: California Homebuilding Foundation (CHF)/Construction Industry Research Board (CIRB) Downloaded from Moody’s Analytics

Or… Majority Do Not Plan to Sell Home When they Retire Do you plan to sell your current home when you retire? California Association of REALTORS®

Only 10% more Younger Boomer plans to sell on retirement Do you plan to sell your current home when you retire? California Association of REALTORS®

Very few are looking to sell immediately 2% 12% 9% 27% 24% 6% 11% 0% 10% 20% 30% 0 - 1 years 2 - 3 years 4 - 5 years 6 - 10 years 11 - 15 years 16 - 20 years 21 to 25 years 26 to 30 years Years Per cent n: 228 How long do you plan to keep this home? California Association of REALTORS®

And 50% don't plan to move at all 9% 14% 10% 12% 1% 47% 7% 0% 20% 30% 40% 50% Don't plan to move Same county Another state Another CA county Same neighborhood Same city Don’t know / unsure Per cent All Respondents; n: 332 Where do you plan your next home to be? California Association of REALTORS®

Some glimmers : Younger boomers more likely to say 6-15 years; older boomers more ready now AND never 2% 1% 13% 8% 6% 14% 25% 32% 29% 10% 7% 4% 18% 0% 20% 30% 0 years 1-3 years 4-5 years 6-10 years 11 - 15 years 16 - 20 years 21 to 25 years 25 to 30 years Years Per cent Older Younger Younger vs Older Boomers; n: 228 How long do you plan to keep this home? California Association of REALTORS®

What Drives this? Older Boomers have more equity 2% 1% 4% 20% 16% 9% 13% 19% 15% 12% 11% 14% 18% 8% 0% 5% 10% <-$250k + -$249k - -$100k -$100k - -$50k -$50k - -$1 $0 - 49k $50k - $99k $100k - $174k $175k - $249k $250k - $399k $400k - $599k $600k + Equity Bracket Per cent Older Younger Young vs. Old Boomers; n: 760 Older Mean : $698,800 Younger Mean : $333,400 Older Median : $205,000 Younger Median : $150,000 Equity Current Value - Purchase Price California Association of REALTORS®

Many Boomers want to stay in their current home, alternatives are changing slowly

Is there hope from boomer renters? They’re searching more, and more amenable.

Renters less likely to be searching for new housing 53% 47% 0% 20% 40% Owner Renter Per cent Pct Answering Yes; Renters and Owners; n: 199 Have you actively looked for housing in the past 6 months? California Association of REALTORS®

But are certainly moving more 19% 4% 26% 9% 14% 7% 12% 10% 11% 15% 5% 42% 0% 20% 30% 40% < 1 years 1-2 years 3-4 years 5-10 years 11 - 15 years 16 - 20 years 21 to 25 years Per cent Owner Renter Owners and Renters Tenure (by Rent / Own); n: 1172 How long have you lived in your current home? California Association of REALTORS®

Renter couples, and renter singles highest likely movers 21% 9% 11% 7% 3% 4% 2% 0% 1% 5% 10% 15% 20% No Children With Spouse / Partner Alone Have Children My adult children live in my house Live With Family With Roommates Living in Adult Children's Home With Boyfriend / Girlfriend Parent With Me Per cent Owner Renter By Different Household Characteristics; n: 1172 Have you actively looked for housing in the past 6 months? California Association of REALTORS®

Boomers / Couples With and Without Children - Couples without children in the house are most likely to move 21% 9% 11% 7% 3% 4% 2% 0% 5% 10% 15% 20% No Children With Spouse / Partner Alone Have Children My adult children live in my house Per cent Owner Renter Selected Different Household Characteristics; n: 1172 Have you actively looked for housing in the past 6 months? California Association of REALTORS®

Looking Couples With and Without Children - Couples without children in the house are most likely to move 11% 7% 9% 5% 4% 2% 0% 8% 12% With Spouse / Partner Spouse / No Children My adult children live in my house Spouse / With Children Per cent Owner Renter Pct. Answering Yes; Spouses With and Without Children ; n: 722 Have you actively looked for housing in the past 6 months? California Association of REALTORS®

Renters are slightly more likely to plan to purchase within 5 years, but also more likely to say never 6% 20% 17% 5% 13% 30% 23% 38% 41% 0% 10% 40% Within 12 months Within 1 to 5 years After 5 years Never Don’t know / Not Sure Per cent Owners Renters Split by Renters and Owners (as a home or an investment); n: 1144 When do you plan to purchase your next house California Association of REALTORS®

Renters say Jobs / raise would get them in the game, but they can’t work forever either 27% 1% 10% 8% 4% 49% 0% 20% 30% 40% 50% I don't plan to buy Getting a Job / New Job / Raise Finding / Marrying Signif. Other Change in family status Finish current lease Starting a family Finishing school Reason Per cent Renters, select any that apply; n: 722 Would any of the following life events spur you into the process of buying a home? California Association of REALTORS®

Younger boomers also say jobs would make a difference 37% 40% 19% 29% 17% 7% 0% 10% 20% 30% Retirement Change in family status Finish current Mortgage Getting a Job / New Job / Raise Finding / Marrying Signif. Other Finishing school Reason Per cent Older Younger Either as a home or investment; Younger vs. Older Boomers; n: 688 Would any of the following life events spur you into the process of buying another home? California Association of REALTORS®

Many are looking at retirement before their stated 10 year purchase horizon 25% 7% 23% 66% 1% 3% 5% 9% 10% 8% 18% 6% 12% 0% 2% 20% 40% 60% Don't know Already Retired This Year 1-3 Years 4-5 Years 6-9 Years 10-14 Years 15-19 Years 20+ Years Years Percent Older Younger Younger vs. Older Boomers; n: 1168 In how many years do you plan to retire? California Association of REALTORS®

So boomer renters aren’t going to be able to help

So what’s next? Supporting the next generation :Family Support and Home Purchases

2/5 Plan to Help Children with Down Payment Do you plan to help your children with their down payment to purchase a home? SERIES: 2016 Generations / Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®®

Less than half Worry About Childrens’ Ability to Become Home Owners Do you worry about your children’s ability to become home owners in the future? SERIES: 2016 Generations / Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®®

Do you worry about your children not having the same opportunities to succeed as you did? Do you worry about your children or grandchildren not having the same opportunities to succeed as you did? SERIES: 2016 Generations / Boomer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®®

Glimmers? Let's Examine Life Change C.A.R.

Family Status Means New Homes! : So... Children? 24% 12% 1% 55% 72% 96% 21% 15% 3% 0% 25% 50% 75% 100% Yes No Considering Per cent babyboomers genx millennials Across Age Groups; n: 2133 Are you hoping to have (more) children within the next 3 years. California Association of REALTORS®

Family Status Means New Homes! Children? Not Even Younger Boomers… 1% 95% 99% 4% 0% 25% 50% 75% 100% Yes No Considering Per cent Older Younger Younger vs. Older Boomers; n: 1172 Are you thinking of getting married within the next 3 years? California Association of REALTORS®

Family Status Means New Homes! : Marriage? Well... 27% 21% 6% 31% 41% 71% 42% 38% 23% 0% 20% 40% 60% 80% Yes No Considering Years Per cent babyboomers genx millennials Across Age Groups; n: 2133 Are you thinking of getting married within the next 3 years? California Association of REALTORS®

Family Status Means New Homes! : Marriage? Lot's of Maybes! 8% 3% 69% 74% 23% 0% 20% 40% 60% 80% Yes No Considering Years Per cent Older Younger Younger vs. Older Boomers; n: 603 Are you thinking of getting married within the next 3 years? California Association of REALTORS®

Marriage? Renters Say Yes! Owners Say Maybe! 13% 5% 70% 68% 17% 27% 0% 20% 40% 60% Yes No Considering Years Per cent Owner Renter Younger Boomers; Rent / Own; n: 362 Are you thinking of getting married within the next 3 years? California Association of REALTORS®

Glimmers? AirBNB? C.A.R.

Very few Boomers use AirBNB, but could be a growth industry 6% 89% 0% 25% 50% 75% 100% Yes No Considering Answer Per cent All Respondents; n: 3727 Have you used your residence as a short term rental California Association of REALTORS®

We need rain Have you thought about purchasing for short term rentals? 52% 48% 0% 20% 40% 60% Yes No Answer Per cent All Respondents who have used AirBNB service; n: 198 Have you thought about purchasing for short term rentals? California Association of REALTORS®

Similar thinking across all people considering 54% 46% 0% 20% 40% 60% Yes No Answer Per cent All Respondents who have *considered* an AirBNB service; n: 376 Have you thought about purchasing for short term rentals? California Association of REALTORS®

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