Opinion: The baby boom wave is cresting

Peak 65 serves as an historic demographic milestone of the new paradigm shift that is changing every aspect of the housing market, finance, retirement planning process and the fragile supply/demand balance of housing inventory for real estate at large.

We are living in a watershed moment in history. The new paradigm brings into question many closely held assertions about who we serve, the type of homes we should be building, and the best way to pay for a home in retirement. Nothing is as it was.

The elegance of demographics serves to illustrate the new reality. Here are some facts via a timeline:

2024 Peak 65: This year, more than 12,000 Americans will turn age 65 every day. That’s approximately 4.3 million people this year, and 4 million more each of the next three years as the historic baby boom age wave peaks.

2030 Transformation: By 2030, all Baby Boomers will have turned 65, traditionally known as retirement age. This sets the stage for the coming Transformational Decade of the 2030s.

2034 Age-Ratio Flip:  By 2034, there will be more people aged 65 and older than people aged 18 and younger. This historic age-ratio flip will force change upon a wide spectrum of economic, cultural, political, social, and housing market realities.

Boomers Dominant Decade: At 78%, Boomers have the highest rate of homeownership, and today, 39% of home purchases and 52% of home sales are made by Baby Boomers. As Boomers move, downsize and age over the next decade, it’s estimated more than 9 million homes will come onto the market, according to Freddie Mac.

Getting older and living longer

2040 Aging Power: By 2040, 80 million people will be aged 65 and older. Like every phase of the Boomer Wave, this represents the most predictable and potent marketplace shift since the beginning of the age of consumerism in 1946.

2050 and Beyond: By mid-century, we will have more than 19 million people aged 85 and older. This fact represents a tripling of our elderly population and will by sheer weight, transform everything we know about housing, retirement, aging in place, and elderhood.

The Great Disruption

Demographics will be our destiny. Every possible consequence of our aging population will be disrupted further by the emergence of longevity. The real possibilities for radical changes in life expectancy are being driven by the exponential sciences of Bionics, Robotics, Neuro-nanotechnology, machine learning, Big Data, Artificial Intelligence, and others.

Boomers are transforming retirement as we know it. Boomers are destined to normalize living to age 100 and beyond. The exciting advances in regenerative health sciences promise to close today’s gap between our health span and our life span. 

Generally, people want to live a long life, so long as they feel healthy, vibrant and in command of their mental faculties. Boomers are driving the retirement transformation. As has been the case for 78 years, Boomers are central to this epic paradigm shift. 

Shift and change

Everything we think we know about the marketplace and the future will demand reconsideration. The next generation of housing will need enlightened new design, how to pay for and support this new age will require intelligent new thinking.

•To Shift, is to move a business model into alignment with the new paradigm. Question every current assumption, rethink every sales and marketing strategy to shift in front of the Age Wave crashing upon the market.

•To Change, is to replace old thinking, old messaging with new vision, to change operational processes, systems, and approaches to the new reality.       

Problems and possibilities

As a generation, Baby Boomers have not saved nearly enough for retirement. Financial advisors are scrambling to find additional streams of income and liquidity for the families they serve. 

Real estate professionals lack adequate and affordable inventory to meet the demands for housing and are suffering from marketplace uncertainty about their future role as professionals. Builders are not keeping up with demand. The many risks, zoning restrictions and cost pressures work against efforts to build the new age of housing that is desperately needed. 

Lenders are restrained by heavy regulation, interest rate volatility and inadequate loan product innovation to expand access to housing, or to support the costs of aging in place.

As Ken Dychtwald, founder and CEO of Age Wave tells us; “We are living in an evolutionary moment in human history, when two thirds of every human being that has ever lived to age 65 is alive on earth today.”

Peak 65 will usher in an era of fantastic possibilities. To seize this moment, we must create greater dialog across all sectors of the marketplace. Builders, real estate agents and brokers, lenders, and financial advisors must come together to solve the problems we face. 

As we shift to serve the new housing marketplace together, we will build better communities, we can preserve our precious property rights, and we must advance the American Dream of Homeownership for generations to come. 

Paul Donohue is a reverse area sales manager for Mutual of Omaha Reverse Mortgage.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the author of this story: Paul Donohue at [email protected]

To contact the editor of this story: Tracey Velt at [email protected]