A FASCINATING RESEARCH PIECE
April 4th, 2007The Radian Group released a report last year on Housing Trends Among Baby Boomers. Some of their findings have importance for the Maui market. Here is a quick synopsis:
In 2004, there were over 43 million American households comprised of individuals aged 50 and older who owned their main residence, of which 15 percent, or 6.6 million households, also owned a second home.
A subset of that represents potential Maui buyers.
There are strong regional patterns of demand for second homes
That obviously would include Maui.
The typical second home is held for about 15 years, but turnover is high: 45 percent of older homeowners with such homes disposed of them within a six-year window. Changes in marital status and health, not income or employment, drive the decision to dispose of a second home.
That has certainly been our Maui experience.
Second homes are a small portion of the typical asset portfolio of an older household and are not important drivers of investment decisions. The numbers in the study say second homes are only 10-15% of a typical owner's net worth. Baby Boomers were no more likely to own such homes than older cohorts of homeowners. It is just that there are so many Baby Boomers. In short, the study argues the second home market is not that large and that it is geographically concentrated. But it also implies that the 10+% of the Baby Boomer part of the population will spend 10-15% of their ever increasing net worth on vacation homes. That's a very powerful economic force over time.
