Wealthy Boomers Like Second Homes

Baby boomers are touted as being the wealthiest generation in U.S. history. But only one in 10 are considered affluent, according to a recent study conducted by Focalyst, a market research firm that is a joint venture of AARP and the Kantar Group. Of the more than 30,000 U.S. adults over the age of 42 who participated in the study, only 9 percent (or one in 10) have an annual household pre-tax income of $150,000 ($100,000 if retired).

Home ownership is important for this financially savvy group, which Focalyst dubs “Boomer Elites.” The study finds them well prepared for retirement; 95 percent (compared to 75 percent of all boomers) have some sort of savings or investments.

They consider their home as an investment, according to Heather Stern, director of marketing for Focalyst. The average home value for this group is $519,000 compared to $282,000 for boomers overall.

Not only do almost all Boomer Elites own their own home, but they are more likely to own multiple homes. Approximately 21 percent of the Boomer Elites own at least two homes, and 7 percent said they plan to purchase an additional home. Among all boomers, only 8 percent own a second home and 2 percent plan to buy a second home.

Still, Janis Ehlers, owner of The Ehlers Group and author of Marketing Seniors Housing, says there are some inherent qualities that extend across the entire boomer population. Real estate practitioners need to understand how important family is for this group, she says. Even retirees, still want big dining rooms and family spaces.

Get Boomer Elites' Attention

So, what’s the best way to reach out to this group? They’re avid consumers of media: 87 percent read a newspaper or magazine and 75 percent use the Internet daily, according to the study. They spend an average of 30 minutes a day on newspapers and magazines with 4 in 10 saying they read the ads in magazines.

Ehlers says the Internet is an important vehicle, but she says that having a response mechanism is equally crucial.

“Boomer Elites tend to read high-end magazines regarding home sales,” says Bruce Nemovitz, ABR®, CRS®, of Realty Executives Lakeshore in Mequon, Wis. Nemovitz’s specializes in the seniors market, and his marketing reach typically extends to their boomer children, too. In addition to print media, he also suggests using radio stations that play music from the 60s and 70s.

Camilla McLaughlin for REALTOR Magazine Online

NAR Study Confirms: They Come To America – To Buy Homes

Nearly one in five Realtors® has sold a home to an international client in the past year, according to new research by the National Association of Realtors®.

The 2007 NAR Profile of International Home Buying Activity is the most comprehensive research that NAR has ever conducted to explore the characteristics of second-home purchases in the United States made by international clients. An international client is a foreign citizen living abroad who has legally entered the United States to purchase a home.

“In this country we have always known that housing is a good long-term investment, and many foreign buyers seem to share this view,” said NAR President Pat V. Combs, of Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt. “This latest study shows that more and more consumers from around the world are interested in purchasing a home in the United States for themselves, as an investment, or simply to enjoy a piece of the American dream.”

In 2006, most international home buyers purchased single-family homes or townhomes, and like most domestic home buyers, they financed their purchase. However, they showed stronger preferences for condos/apartments when compared to U.S. home buyers; 22 percent of international buyers purchased condos/apartments, versus 12 percent of U.S. buyers. Twenty-eight percent of foreign buyers bought their houses with cash, compared to 8 percent of U.S. buyers. The median sales price of homes purchased by international buyers was $299,500, which is significantly higher than the U.S. median of $221,900 during the same period.

Forty-seven percent of all international buyers purchased homes exclusively for vacation, while 22 percent were motivated primarily by investment. Nearly a third of foreign buyers cited both vacation and investment as reasons for their purchase. International homeowners spent an average of 4.2 months of the year in their U.S. property in 2006.

A third of all international buyers are from Europe, but buyers from Asia and North America (outside the United States) each represent about one-fourth of the total market. Sixteen percent of all international buyers are from Latin America. By individual country, most buyers come from Mexico (13 percent), the United Kingdom (12 percent) and Canada (11 percent).

Foreign buyers purchase homes across the United States, but 52 percent of sales in 2006 were concentrated in three states – Florida (26 percent), California (16 percent) and Texas (10 percent). The South attracted nearly half – 49 percent – of international buyers last year, while 31 percent purchased homes in the West.

Nearly a third of the Realtors® surveyed worked with international clients or prospects during the previous year. Realtors® who actually closed sales of homes to international clients reported an average of 1.9 clients, representing 15 percent of their annual business. Most Realtors® reported a rise in sales to international buyers – 25 percent of Realtors® had increasing business compared to five years ago, with another 67 percent reporting about the same level of international business; only 8 percent noted a decrease. A third of Realtors® surveyed believe that foreign retirees will represent an increasingly important market for Realtors® based in the United States.

“Just as many U.S. residents are looking overseas for retirement and second homes, people in other countries are considering a home in this country,” said Combs. “As international boundaries of homeownership dissolve, Realtors® must stand ready to serve an increasingly diverse and multicultural marketplace.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

Like their American counterparts, many foreigners are avoiding the hard-hit Rust Belt: 41% bought homes in the South, while 31% were attracted to the West.

A few Sunbelt states, notably Florida, California and Texas, are particularly popular with foreign buyers.

They're picking these places, and not cheaper resort areas in developing nations, because they don't have to be concerned about economic upheavals, political coups or general lawlessness.