Why more NJ baby boomers are renting instead of buying
A growing number of baby boomers, in New Jersey and across the nation are opting to live in rental apartments instead of houses.
Researchers at the Metropolitan Housing and Communities Policy Center at the Urban Institute report that over the past several years, we’ve been seeing a decline in the share of 55-to 64-year-olds owning homes, a pattern that accelerated between 2010 and 2013 in the wake of the Great Recession.
They believe this is happening for several reasons, including the fact that there are now tighter credit standards for mortgages after the financial crisis.
Changing needs and the overall cost of owning and maintaining a home are also significant factors, especially in New Jersey, according to the report.
"Baby boomers are over-housed, essentially they’re moving from their very large 4 bedroom homes, they’re empty nesters and they don’t need all that space,” said Rutgers University economist James Hughes.
Hughes said the bursting of the housing bubble a decade ago changed attitudes toward homeownership very significantly.
“Many boomers are happy to cash out of their single family unit and become renters, and there are a lot of options in the rental market,” he said.
He also pointed out rent in many parts of New Jersey is high, but when boomers cash out of their big house “they will at least have a nest egg, and even though rents are expensive, you don’t have the expense of maintain a single family home. At some point you get tired of home maintenance and upkeep of very large dwelling units and the like and you really do want a change in lifestyle.”
Hughes stressed it takes a lot of money to maintain a home.
“One of the disadvantages of homeownership are the sheer amount of operating costs, capital costs that you experience when you’re a long-term homeowner, homes do wear out and you have to constantly replenish them, however, if you’re renting, if the furnace goes out it’s the apartment owners problem to fix it,” Hughes said.
He said another factor in this trend is an increasing number of boomers are suffering from so-called "suburban fatigue."
“They may well be tired of driving everywhere, not being able to walk, and rental units in walkable environments are an attractive option,” he said. “You can also go from two cars to one, because you’re living in a walking environment, you can walk to a grocery store, walk to a restaurant, walk to a library.”
He said traditionally in New Jersey, about 75 percent of the houses built were single family units, and 25 percent were rentals, but today, the opposite is true.
"It’s just the reverse today it’s about over 65 percent are multi-family dwellings, 35 percent single family units," he said. "These new desires of how people want to live are reflected in new construction.”