Boomers Are Downsizing, Dominating Philly's Real Estate Market
Boomers Are Downsizing, Dominating Philly's Real Estate Market
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Boomers Are Downsizing — and Dominating Philly’s Real Estate Market
Baby boomers are flexing their financial might, snatching up smaller homes left and right. Here’s what’s driving the trend.
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Boomers are downsizing, and it’s changing what the real estate market looks like. / Photo-illustration by C.J. Burton
Take a walk through the Laurel, the recently completed luxury condo tower at Rittenhouse Square’s northwest corner, and you might mistake it for a retirement community.
When you consider how many aging baby boomers call it home, that makes sense.
As of the end of January, 60 percent of the Laurel’s 65 condos had been sold. And 65 percent of those buyers were baby boomers.
The baby-boom generation has been the pig in the demographic python ever since World War II GIs and their wives made like rabbits the moment the warriors returned home. And as that cohort has aged, it has shaped and reshaped the way Americans live. From mass-produced suburbs like Levittown aimed at their parents to more upscale suburbs targeted at them as they rose through the workforce, the boomers have had their needs, desires, tastes and preferences determine what our communities look like.
That’s certainly been the case locally. And though the boomers are done raising families and are exiting the workforce, they’re still reshaping the way we live. Or, at least, reshaping the way they live.
Financial Flex
The boomers are no longer the largest generation; millennials surpassed them in 2019, and Generation Z is nipping at their heels, if it hasn’t outgrown them already. But according to the National Association of Realtors, boomers last year overtook millennials as the single largest segment of the home-buying population — a designation those millennials had held since 2014.
Several trends contribute to this rise in boomer buying.
The older half of the generation (the youngest members of this half turn 69 this year) is largely out of the workforce. And while medical advances allow aging boomers to live longer, healthier lives, no one has yet found a way to halt aging entirely. These older boomers, then, are looking at the day when they may need help performing everyday tasks — and looking for communities where they can get it.
The younger half includes many who, like me, remain in the workforce and have no plans to retire anytime soon. (I was born in the second-highest year for births in the baby boom, 1958, and celebrated my 65th birthday in October.) Most of this group needs space for working from home, since the pandemic drove so many of us to work where we live at least part of the time. But our kids have also flown the coop, so we’re looking to jettison the extra bedrooms we needed for them.
And some of us want to get rid of the yards around our houses as well. We’re finding it harder to climb stairs, fueling a demand for main-floor bedrooms. New-construction houses increasingly have those, but for boomers who don’t want to buy a new house (and another yard), that usually means buying a condo, like those at the Laurel.
Brian Emmons, vice president of the building’s developer, Southern Land Company, says that’s not all we want, either.
“For people that are downsizers and boomers, they’ve worked their entire life, and they’re at the place in life where they want the amenities in the building,” he tells me. “They want the gym, they want the club room, they want the town car, they want all the nice things that come along with that. And the last thing they want to do when they come home is worry about shoveling the snow, weeding the flower beds, or taking care of the landscaping.”
Emmons adds that just like older boomers who aren’t yet ready for assisted living but are moving into continuing-care retirement communities anyway, some of the boomer buyers at the Laurel are buying in anticipation of living without kids again: “We’re selling condos right now to people whose kids are getting ready to fly the coop. They’re making this purchase a year or two ahead of time.” And, he says, they’re making use of those new digs ahead of time: “They’re ready to get it furnished, and when there are weekends and opportunities to sneak into the city now, they’re taking advantage of that.”
Of course, all this comes at a price — one that only affluent boomers can really afford to pay. Right now, you won’t be able to get into the Laurel for less than $2.7 million, with a $2,048 monthly condo fee on top of the mortgage payment.
“There aren’t more expensive condos than the ones we’re selling right now,” says Emmons. “Because of the price point, they just tend to go to an older buyer.” These affluent older buyers aren’t deterred by high interest rates, since they can use the equity in their old homes to finance their new ones. (Assuming they can sell them expeditiously: The middle of the real estate market hasn’t seen a serious slowdown, but the upper end of the market has.) And even not-so-affluent boomers can buy into this lifestyle, as plenty of less expensive condos can be found all over the region.
Rent, Then Buy
For boomers who can’t tap a huge pile of cash, renting is a viable option. An older boomer couple, for instance, could move into an apartment in the Laurel’s rental portion, 1909 Rittenhouse, for $3,033 a month with $9,099 up front (first and last month’s rent plus security deposit). And they’d get amenities identical to those at the Laurel (minus the town car).
There are other reasons to rent, too. Leo Addimando, co-founder and managing partner of Alterra Property Group, says some boomers looking to transition from their bigger houses test-drive the idea by renting first.
“We see plenty of people who on paper could afford a really nice condo who will rent for a time — kind of try before you buy — while others will just buy a place, and if they don’t like it, they’ll sell it and do something else,” he says.
Renting also makes some sense for those boomers who need to adjust to the idea of living in less space and with less stuff.
“One of the issues in our buildings is that we have very few three-bedroom units,” says David Perlman, whose PRDC Properties builds, renovates and manages apartment buildings and townhouses for rent and sale. “And most of the empty nesters we are used to usually want more space than they actually need, because they’re coming from very large spaces. So we wind up renting our townhomes to them for the first go-round. They’re coming from a 4,000-square-foot ’burb house. They can fit into a 3,000-square-foot townhouse, then into an 1,800-square-foot apartment.”
Of course, moving from a big house in the ’burbs to a not-as-big one in the city means one-floor living is unlikely. So elevators become important amenities.
“And space to store stuff is important to them,” says Perlman, noting that it’s sometimes not until a second move that downsize-deniers realize they’re just storing boxes of things they don’t need or use anymore.
Spacing Out
Of course, no generation is a monolith, and not all the aging boomers are giving up suburban splendor for the urban excitement of their youth. Some, like the DeFrancos profiled in this package, remain in or move to suburban environments to be closer to where their children (and grandchildren) live. And others may simply be moving from one city neighborhood to another that’s more convenient.
This recent surge in boomers moving to adjust to life changes actually picks up where a previous surge left off, says Addimando: “Pre-COVID, there was a steady stream of affluent to very affluent retirees and empty nesters — baby boomers who were opting to sell their big suburban home and move into a nicer but smaller place. Maybe they started with a rental and eventually bought an expensive condo in town.
“COVID didn’t put a full stop to that, but it did significantly slow the migration to the city. It hasn’t picked back up to where it was before, but there’s been an uptick in empty nesters looking for larger apartments.” (Alterra operates exclusively in the rental space; it owns 13 midrange and upscale apartment buildings in the city and suburbs. Addimando notes that boomers like the company’s renovated historic properties, such as the Versailles in Rittenhouse Square and the Wynnewood on the Main Line.)
And just as condo and townhouse developers are adding the features aging boomers want to their new developments, apartment-builders are modifying their designs to accommodate not only these boomers, but also younger tenants whose work styles have been altered by the pandemic.
“What we’ve seen post-COVID has been a need for more living space in apartments, whether it’s from empty nesters or young professionals,” says Addimando. “Apartments shrank for 10 to 15 years and now are getting a bit bigger and specifically targeting the empty nesters. We are building some larger two-bedroom apartments with a den area, and the den can be anything from a place for someone to work to a quasi-nursery to just a place to put all your stuff when you move out of a 5,000-to-8,000-square-foot suburban home.”
But, he says, when it comes to amenities, the downsizers who rent from Alterra aren’t as demanding as the luxury-condo crowd. “The three things that empty nesters moving in from the suburbs look for are on-site parking, an on-site place to walk dogs, and a gym. That doesn’t seem like a heavy lift.”
Location, Location, Location
The two main challenges boomers face when downsizing or relocating are material and emotional. The two overlap in the challenge of getting rid of the detritus of life that they’ve accumulated over the years. (See the next page.) But there’s a separate emotional challenge: getting comfortable with a totally different environment, especially if, like so many boomers, they’re leaving homes they’ve lived in for a long time.
The pros in the business advise these movers-to-be to do some legwork beforehand. “A few years ago, I moved from the city to the suburbs,” says Addimando. “I bought a house, and I sold it a year and a half later, because I bought the wrong house in the wrong location. I would encourage folks who are coming into Philadelphia to do their homework, look around, pick a neighborhood first, and, depending on their financial means, rent something for a year, to make sure they can get into the swing of city living before they commit to a purchase. It’s a very different rhythm of life.”
Perlman echoes Addimando. “Look for an area that you feel comfortable and safe in, first and foremost,” he says, “where you can walk and enjoy your surroundings, because you’re coming from the suburbs, where you had a yard and looked at trees. And you won’t have that in the city.”
But he also advises empty nesters to consider that they’ll want to welcome their children as overnight guests in their new digs: “They’re not going to get a four-bedroom rental apartment, but they want to be able to accommodate their kids and their grandkids when they come to visit. That’s why I believe townhome rentals are the best first move for an empty nester.” If you decide a townhome is where you want to stay, Perlman’s firm will gladly sell you one — or even build one for you.
And there might be some boomers who would ask PRDC to build them a bigger townhouse: As I was in looking for boomers willing to share their moving stories with me, one real estate agent I spoke with pointed me to a client of hers who actually upsized rather than downsized. There are some good reasons for staying put or upsizing: As noted before, you may expect your kids and their kids to visit and want them to have a place where they can stay. Or your current house may have amenities you won’t be able to replicate easily elsewhere. Or you may just plain like the neighborhood where you live now.
But many of you are still trying to figure out how to do more with less. The process won’t be a breeze, as our movers’ stories should make clear. But you will be able to reach your goal with some planning, effort, and maybe a few tears shed. Whether you decide that your future home should be a smaller version of the suburban home you now live in, a one-floor apartment or condo in the city, or even a townhouse — with an elevator, of course — the next home of your dreams is already out there.
>> Click here to return to Real Estate Trends for 2024: The Great Downsizing
Published as “The Great Downsizing!” in the March 2024 issue of Philadelphia magazine.
Real Estate Trends for 2024: The Great Downsizing
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