Baby Boomers Focus on Condo-Hotels, Continue to Feed Slowing Real Estate Market

This is a familiar refrain: the Florida housing market is weaker than it’s been over the last five years.

As these reports continue to come in, however, there’s one constant that prevents any sort of real estate crash in the state - Baby Boomer demand. This equity-rich group of retirees will keep the momentum of the market at a steady pace, using the money they’ve saved on vacation and second homes.

The number of these houses purchased between 2000 – 2004 has nearly doubled. Moreover, their value has doubled as well, with the average home rising 55% during these four years. Keunwon Chung, a statistical economist at the National Association of Realtors, says the Baby Boomers are primarily motivating the second home market, applying for Florida home loans around the region.

Florida welcomes retirees, vacation properties

Tax-friendly retirement states such as Florida, Arizona, and Nevada have witnessed an explosive growth in both home construction and appreciation. Florida experienced a 25% increase in home prices last year, with one in five of those homes being a second home purchase. The U.S. Census Bureau expects this rate to steadily continue and predicts second home purchases from Baby Boomers will reach 6.4 million units by 2010.

Most Baby Boomers are seeking luxury in their second homes. According to a Coldwell Banker survey, the Boomer generation “…wants luxurious homes and wants to remain active.” Most importantly, this generation can afford their desires.

From the accumulation of wealth through the stock market, home equity, and inheritance, Boomers have more money than any previous retiree generation. Studies from Harvard, NAR, and NAHB agree that Boomers will most likely use their resources to purchase multiple residences that focus on location and amenities.

Rise in condotel sales

While condos traditionally filled this requirement, a growing number of Boomers are now turning to condo hotels, especially in the Florida housing market.

Condo hotels appeal to Boomers because they market luxury and location.

“Why buy a condo in town that sits empty for 3/4 of a year when they can own a condo hotel, have five-star amenities available to them, be centrally located in a top vacation destination, and receive rental income?” says Steven Roszell, owner of CondoHotels.com and HotelsForSale.com.

Expect the condotel market to sky-rocket as more and more Boomers realize the appeal. Others may follow suit, instead of wasting a Florida home loan on a second house that is rarely used.