Boomers' New Retirement Option: Condo Hotels Despite national reports citing the real estate frenzy is approaching a freeze, Baby Boomers will continue to heat the market
RISMEDIA, July 21, 2006—Despite national reports citing the real estate frenzy is approaching a freeze, there is a rising demographic that will continue to heat the market: The Baby Boomers. As they pursue their ideal vacation or retirement home, analysts suspect that this equity-rich group of retirees will keep the momentum of the market at a steady pace.
Research indicates the number of second homes purchased between 2000 – 2004 has nearly doubled. The value of homes doubled as well, with the average home rising 55% during these 4 years. Keunwon Chung, a statistical economist at the National Association of Realtors, says the Baby Boomers, especially those with above-average incomes, are primarily motivating the second home market.
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." And 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.
While condos traditionally filled this requirement, a growing number of Boomers are now turning to condo hotels.
Condo hotels appeal to Boomers because it markets 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.
The rental of the condos, provided by the hotel management company when the condo is unoccupied, is another main attraction of condo hotels for Boomers. Bob Waun, of Vacation- Finance.com , says condo hotels offer "subsidized luxury" for Boomers. Waun also believes sheer Boomer demand will motivate the condo hotel market. He cites, "if only 1% of this generation demands condo hotel as a second home option, 1.45 million units will be needed. That's 96,000 condo [hotel units] per year, every year..." for the next fifteen years that Boomers will be retiring. Considering that currently the U.S. has only a handful of markets for condo hotel resorts, it is probable that that demand will supersede supply. |
