Why Baby Boomers Will Become a Massive (Yet Underserved) Renter Demographic

by | BiggerPockets.com

As a multifamily buy and hold investor, for years now I have heard endless talk of how Millennials are the renter demographic. They don’t want or can’t afford to buy their home, and we as rental owners should be targeting this demographic and appealing to their preferences. This may be true, but behind all this hype of the Millennial generation creeps this massive wave of rental demand from what has been the largest demographic for the past 50 years.

The Baby Boomers have been a background thought when it comes to renter demographics. As an active buyer, I believe this has left an opportunity in the market that other buyers are missing. As real estate markets around the country continue to climb and competition when buying increases with them, I have been looking for a way to break away from the herd and find an opportunity that the masses are not chasing.

What Do We Know About Baby Boomers?

It is my belief that over the next 1-5 years, Baby Boomers will be substantially underserved in their demand for rentals, specifically affordable market rate rentals that cater to senior living preferences. To clarify, this does not mean 55+ zoned communities, but rather market rate rentals that simply have characteristics that a senior would desire. In this article, I will back up that statement with real data and common sense to piece together these not-so-complex ideas that expose the opportunity that seems to be cloaked by the Millennial renter craze.

Lets start from the beginning.

  • Baby Boomers, according to the U.S. Census Bureau, are the demographic group born during the post-World War II baby boom, approximately between the years 1946 and 1964. This includes people between 53 and 71 years old in 2017. Over this period, over 76 million babies were born in the United States, and factoring in immigration, the current estimates of the Baby Boomer demographic are close to 80 million people.
  • In 2017, the median age of a Baby Boomer is 62 years old. In the United States, 62 years old is the first year individuals can retire and begin to receive social security benefits. Many Baby Boomers have lived their whole adult life aiming to retire between the ages of 62 and 66 using their social security benefits to support them in their remaining retired years. In fact, the math tells us that over 12,000 Boomers will be retiring every day for the next several years. [(80,000,000 Boomers/18-year age span)/365 days per year = 12,176 retired Boomers per day.] Of course, some of that figure will not retire, and some will die, but the point is not to be exact but rather to show that there is going to be a massive wave of retirees in the United States in the next 1-5 years.
  • Unfortunately, of those tens of thousands of retires per day, only a small percentage are actually financially ready to retire. Research by the Insured Retirement Institute shows us the likely financial strain for retiring Baby Boomers. According to the study, 24% of baby-boomers have no retirement savings—the lowest number since the study started in 2011. Only 55% of Baby Boomers have some retirement savings, and of those, 42% have less than $100,000. Thus, approximately half of retirees are living off of their social security benefits.

When I read that half of all retirees were going to be living off social security, my next question was, “How much is the average social security payment?” According to the Social Security Administration, in January 2017, the average payment is approximately $1,317.

So there is a wave of 80 million Baby Boomers that is cresting in 2017 and that will begin its peak retirement at staggering pace in the tens of thousands per day. But 74% of them are not financially ready to retire. Why? There is not a hard and fast answer to this question, but I believe it is a multitude of things. The 2008/2009 crash spooked many Boomers and had them selling stocks at the bottom of the market, resulting in them missing the resurgence of the market in the following 8 years. It could be that wages have been stagnant for 10 years; it could be that true inflation has been eating away at their savings and boosting their cost of living. Or maybe it’s just that the savers had such terrible interest rates to save in for the past 10 years. Maybe it’s all of these things combined. Maybe it was just mismanagement. It was probably a little bit of everything. Why it happened is less important than what needs to happen moving forward.

Related: How to Kick Your Business Up A Notch by Tapping Into “Baby Boomer Niche”

What Freddie Mac’s Survey of the 55+ Population Reveals

What will happen moving forward with the Baby Boomers? Well, fortunately, in July of 2016, Freddie Mac noticed the things I have mentioned above and conducted their first ever Freddie Mac 55+ survey of housing plans and perceptions to help answer that question.

Here are some key findings from that survey.

They plan to rent versus buy their next home.

Among those 55+ renters who plan to move again, 71 percent of respondents plan to rent their next home. For many, this may be a renter-by-choice decision, as 38 percent say they have enough extra money to go beyond each payday including for savings. Further, more than half (59 percent) think it makes financial sense for people their age to be renters. This view is held by 67 percent of multifamily renters.

Their top attractions are affordability and amenities.

Among the top “very important” factors influencing their next move, respondents picked affordability (60 percent), amenities needed for retirement (47 percent), living in a community where they are no longer responsible for caring for the property (44 percent), and being in a walkable community (43 percent).

They don’t want to move far.

Among those who plan to move again, 55+ renters would like to relocate to a different neighborhood in the same city (31 percent) or a different property in the same neighborhood (23 percent) compared to those who would like to move to a different city in the same state (18 percent) or move to a different state (24 percent).

As real estate investors chase the Millennials and cater to their lifestyle and renting desires, they are missing the opportunity to serve the massively underserved demand of the Baby Boomer generation.

The question is how does all this data translate into applicable real estate investing? This is where the common sense approach comes in. It’s pretty clear what this is showing us. There is and will continue to be a staggering amount of Baby Boomers entering in the renter market, and if you can meet their needs, demand will be so great that the probability for investment success will increase significantly. I believe those needs are catering to the senior lifestyle, while also remaining highly affordable, in areas that Baby Boomers already live. For our company, this means we look to purchase apartment communities with no steps, small unit floor plans, larger property footprints with more landscaping, and nearby grocery stores and medical offices.

Related: The 4 Social Networks You Need to Connect With Millennial Buyers & Renters

The trick is balancing these senior needs while also investing in a market where there is also growth in jobs and population. It is great if you can fill the needs of all the Baby Boomers for the next 10-20 years, but what happens when that ends? If you can satisfy the undeniable demand Baby Boomers have for the next 10-20 years, you will have one of the most predictably consistent renter demographics on the market. Do that in a market that also shows the fundamentals to maintain or grow past the Baby Boomer generation, and you are in line to make a terrific investment.

There is no doubt the Millennial generation is one to be watched closely, but the point of this article is to note that there is another massive trend in renter demand happening that is getting only a fraction of the attention it deserves. I would also argue that the Millennial generation is far more unpredictable than the Baby Boomers. We don’t know how they will behave. If we have one, two, or maybe three more years of strong economic growth and the Millennials begin to feel secure and have paid off some of their student loans, they may just decide renting isn’t for them anymore and decide it’s time to buy. I have no idea where that demographic is going to be in 5-10 years, but the Baby Boomers are more predictable—and when you are a long term buy and hold cash flow investor like us, predictability is very valuable.

Does your real estate business cater to the Baby Boomer demographic? Why or why not?

Let me know your thoughts on renter trends below!

About Author

Jered Sturm

Jered Sturm is co-founder and director of sales and marketing at SNS Capital Group. Jered began in the real estate industry in 2006, working for a successful real estate investment company as a handyman. From 2009-2012, Jered co-founded the construction company Sturm Properties. Using his background in contracting and construction, he began investing in “Value Add” real estate. Now, after co-founding SNS Capital Group, Jered has conducted over 10 million dollars in real estate transactions. He currently co-owns and operates a portfolio worth over 3.7 million dollars in investment real estate.


  1. Giovanni Isaksen

    Jered, with you on the Boomer rental market. The big challenge will be delivering attractive product at a price point that fits Boomers’ budgets. The upper-third, renter by choice probably will slot into Class A properties but that middle third living on SS and maybe a little equity from selling their home is going to be tough price-wise (The lower third will be in subsidized housing or living in their cars, not pretty but that’s the reality).

    Typically you want tenants paying less than a third of their income in rent but with retirees maybe that gets pushed to 50%. So for the Boomer living on that $1,370 SS check their max rent is $685 which won’t get much of anything in the coastal markets (where the majority of the population lives) so figure they’ll have to double up with a roommate to find a two or three bed for 1,370 and then live very frugally. With each only having 685 to spend on everything else; utilities, food, clothing, insurance, medical care (the big one, and if Trump care drive premiums up…) probably means no car once the one they retire with dies.

    So how do we deliver Boomer attractive one-beds at $685 and two/three-beds at $1,370 in a walkable neighborhood with good access to medical services? That’s the challenge we’re working on right now.

    • Jered Sturm

      I agree with your insights Giovanni. And precisely because of your thoughts we may also see a resurgence into the more affordable southeast and midwest markets. For example, I am actively pursuing a property in the midwest that average rents are $550 a door and average sqft per unit is 680. It is in a good area with all the things I mentioned in my article. You can check all the boxes needed, you just can’t do it in the coastal markets… Maybe another indicator of the tides shifting, maybe not. Time will tell. Also, the Avg SS benefits of $1370 are just that and average so in the coastal markets where median incomes are higher the SS distributions are likely to be higher there as well. As always time will tell.

  2. Gregory Jackson


    Nicely penned. I like your think-outside-the-bun theme here.

    Author Ken Dychtwald has written a bunch of stuff on longevity – including baby boomers — and how that impacts a variety of things. He’s also on YouTube.


  3. Great article. In there lies the problem I run across regularly. Affordability & walkability/location for retirees whose limited income Impacts rent levels. Identifying inplace product with the promise of upside for this occupancy class is challenging. As for development, getting the land right coupled with tax abatements and exemptions MAY produce a productive product but that’s to be seen. Retiring at a reported 10,000/day what will their option be?

  4. Jon Loca

    Thanks Jared for sharing. I’m curious as to how many seniors plan on moving in with their children? I know as my parents get older and fitting into the demographic of $1200 in SSI. I’d much rather have them move in with me (especially if I’m married with children) and save their money on rent, help around the house, and help watch children? To me its a win win, the parents save money, get to be close to family, and maybe create a sense of purpose and their children can have help around the house and with bills.

  5. Audrey Ezeh

    Great article Jered! My one concern with this demographic is being able to raise rents to keep up with the market and maximize cash flow! I’m going after a property now with boomers on fixed income and they pay about $150 less than market rates and the landlord still has trouble collecting rent from them. I’m all for renting to boomers as they will no doubt provide stability and less turnover and will generally take care of the property. How do you think an investor can overcome the issue? Thanks again for a great read.

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