Baby boomers ready to downsize may find few options available

By: Tiffany Esshaki | Birmingham - Bloomfield Eagle | Published August 24, 2016

 Empty nesters may want to downsize their homes and move to houses that are all on one level.

Empty nesters may want to downsize their homes and move to houses that are all on one level.

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METRO DETROIT — According to www.realtor.com, millennials — buyers 35 years and younger — for a third consecutive year make up the largest group of homebuyers in the United States, at 35 percent.

But not far behind them is the baby boomer generation, now reaching ages between 50 and 70 years old, who account for 31 percent of the market. And, strangely enough, no one seems to be building or remodeling homes for either set, according to Howard “Hoddy” Hanna, owner of Howard Hanna Real Estate Services, which has stormed into the southeastern Michigan real estate market in the past couple of years.

“There’s a relatively low supply of homes in a fairly brisk market,” Hanna explained. “There’s very little new construction focused on what millennials and baby boomers really want. There’s a focus on apartment buildings with relatively small units for higher price points, and larger homes at higher price points.”

Since millennials and baby boomers are both in the market for smaller homes — generally below $200,000 — and few developers are building homes to meet that criteria, there’s a huge demand for smaller properties, and they tend to sell within days of being listed.

On top of wanting to downsize, boomers are looking for properties with first-floor living options. A first-floor master suite is gold to an aging buyer who knows they may have trouble climbing stairs in the next few years.

“The empty nester, retiree crowd wants everything on the same level,” Hanna said. “I think you’re going to see a lot of people adding masters onto the first floor in the next few years.”

Ray Safadi, owner of P.C. Contracting in St. Clair Shores, said he would have bet his bottom dollar years ago that he would be flooded now with requests for first-floor additions. But that’s just not the case — yet.

“People are still (buying) colonials and tri-levels; they’re not ready to downsize yet. I’ve done more of those than I have the ranches and first-floor-level units,” Safadi said.

But he doesn’t think that will always be the case. In fact, he said that any new builds his company takes on will look very different than the ones he’s built in the past 25 years, because homeowners’ needs are changing.

“I’ll tell you, from this point forward we’re only going to do the ranch style. It’s easier to build than a two-story, it’s less expensive to build and it’s easier for (residents) to get around,” he explained.

As boomers start to push the top end of their golden years, Safadi projects that many will opt to take their longtime homes and remodel them to fit their needs.

“It’s actually better for people to keep a bungalow-style home, use the upstairs space for storage and add on to the first level. That’s probably the wisest, most cost-effective way of doing it,” Safadi said.

A home with more than 1,200 square feet often can be remodeled to suit a homeowner’s unique needs, he explained, while homes smaller than that usually require an addition. Homeowners can design their new space to be whatever they like, with skylights and high ceilings to more functional choices like wider hallways, grip rails and other safety features.

Building onto their existing homes could be a lengthy process — sometimes between two and four months — but for homeowners with considerable amounts of their homes paid off, an addition makes more sense financially than buying new.

Hanna even suggested that homeowners think about revamping their current home’s floor plan to feature a master bedroom option on the first floor if they’re considering selling. With home prices continuing to increase an average of 6-8 percent yearly, and the expectation that the trend will continue for at least the next 18 months, sellers can be fairly certain they’ll see returns on their investments.

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