The Real Deal New York

Baby boomers become buyers

With residential prices no longer free-falling, empty nesters start entering the market in full force
By Candace Taylor | December 30, 2009 06:18PM
Jessica Cohen of Prudential Douglas Elliman at 140 West 69th Street, a building popular with suburban baby boomers.
Jessica Cohen of Prudential Douglas Elliman at 140 West 69th Street, a building popular with suburban baby boomers.

When Core’s Kirk Rundhaug started marketing 32 Clinton Street, a four-unit boutique condo in a far-flung corner of the Lower East Side, he was somewhat surprised at who showed up at his open houses.

In addition to the young hipsters generally associated with the edgy neighborhood, Rundhaug fielded inquiries from empty nesters from the suburbs of New Jersey and Connecticut.

“They were Lower East Side people when they lived in New York,” he said of one 60-something Westchester couple who are eyeing a two-bedroom unit. “They want to come back.”

Manhattan’s population of people aged 65 and older is expected to surge nearly 60 percent by 2030 as the baby boom generation ages. And while boomers had largely disappeared from the city’s real estate market in the wake of the financial crisis, brokers say this all-important demographic is now becoming active again.

With prices no longer in free fall, many of the city’s boomers are now putting their sprawling apartments and townhouses on the market as they look to downsize to one- and two-bedroom homes. Meanwhile, suburban empty nesters are also reentering the market with an eye toward eventually retiring in the city, exchanging large, labor-intensive houses for apartments rich in services.

Already, the preferences of these buyers and sellers are shaping the market in some neighborhoods and buildings, experts say, and will increasingly sculpt the next generation of real estate sales.

“They’re selling their houses in Connecticut, New Jersey and Westchester, and they’re all moving back,” said Rundhaug, who recently sold two apartments to an empty nester who bought one for himself in Soho and another for his son on the Upper East Side.

“They don’t need the big houses anymore.”

The term ‘baby boomers’ refers to anyone born between 1946 and 1964, during the explosion of more than 77 million births that followed World War II. As the oldest of this generation approaches retirement, the number of people over 65 in Manhattan is projected to rise to 295,000 by 2030, up 57.9 percent from 2000, according to city data.

Wealthier and more active than previous generations of retirees, many boomers are looking to retire in urban settings — for at least part of the year — rather than decamping to warmer climates, according to Paul Bishop, the vice president of research at the National Association of Realtors, which published a 2006 study called “Baby Boomers and Real Estate.”

“Boomers are looking to move back into an urban setting after years in the suburbs,” said Bishop, noting that cities like New York are attractive because they offer easy access to public transportation, health care, culture and restaurants.

Despite these factors, boomers largely disappeared from the New York City real estate market after the financial crisis of 2008, licking their wounds from heavy losses in home equity and their stock portfolios.

“This is a very cautious population when it comes to spending their savings,” noted Jessica Cohen, a senior vice president at Prudential Douglas Elliman.

However, brokers said, now that the stock market has recovered, boomers are returning to the market.

“I’m seeing them again,” said Cohen, who recently met with an empty nester interested in a co-op at 140 West 69th Street, a doorman elevator building popular with suburban baby boomers because it’s near Lincoln Center and allows pied-à-terres.

Cohen, who specializes in the Lincoln Square area, said empty nesters are becoming an increasingly crucial part of her business.

“In this neighborhood, that is definitely a huge piece of my target population that I don’t see as much in other areas,” she said. In order to reach baby boomers, she often runs ads in the New York Times, rather than online as she does to target younger buyers.

“I can get more of the tri-state empty nester market by advertising with a print ad,” she said.

Many of these buyers want to take advantage of the discounts in the market, said Charles Homet, a senior vice president at Halstead Property.

“For these people, this is maybe the last purchase that they’re going to make. This is an opportunity to get in at a good price and keep their costs low,” Homet said.

Click image for larger version

He recently sold a classic six on Washington Square West to a baby boomer couple downsizing from a spacious Gramercy duplex. “They realized that upstairs-downstairs living was not going to work for them long-term,” he said.

At the Kalahari, a recently completed condo at 40 West 116th Street in Harlem, a baby boomer couple recently bought a home after selling their pied-à-terre on East 86th Street, after complaining that the Upper East Side felt “sterile,” said Lisa Gomez, the executive vice president at L+M Development Partners, the Kalahari’s developer.

The number of baby boomers buying and selling homes in the city will only grow in years to come, brokers said.

In the next 10 years, the number of boomers looking for New York real estate “could very well increase,” said Elaine Clayman, a broker at Brown Harris Stevens.

In the meantime, boomers are also having a growing impact on the supply side of the market, said Clayman, who currently has eight signed contracts from boomers selling their homes, either departing for other areas of the country or downsizing in the city.

Now that transactions have picked up after the deep freeze that followed the financial crisis, baby boomers have begun putting their homes on the market again, Clayman said. While they are disappointed that prices have fallen, many purchased their homes long ago and still stand to make significant profits.

“I’m finding that they’d rather sell than take a chance [that prices will fall further],” she said. “They want to move on.”

Townhouses are one area many boomers are abandoning for more retirement-friendly homes with doormen and elevators. Cohen said her parents recently traded their 16-room house in Brooklyn for a one-bedroom condo with an alcove at 3 Lincoln Center on 66th Street.

Experts said boomers often seek two-bedroom homes, or one-bedrooms with a “flex room” that can be used as a guest room. Developers are already starting to respond to this trend, according to Andrew Gerringer, managing director of the Prudential Douglas Elliman Development Marketing Group. He said that’s the reason “flex rooms” can be found in projects like Midtown South condo conversion 76 Madison Avenue and Barbizon/63 in Lenox Hill, which Elliman marketed.

With boomers increasingly unloading larger homes, will the next generation inherit an oversupply? It’s possible, experts said.

“I think the concern is, when the baby boomers sell, who buys?” said Jonathan Miller, the president of appraisal firm Miller Samuel. “It’s a population bubble that went through the pipeline, so you physically have more [baby boomers] than the buyers behind them. I think that will be an across-the-board phenomenon.”

Comments are closed.