Millions of baby boomers are now rapidly approaching their retirement ages, while many more have already reached this milestone. One thing a large number of them have in common is that they're starting to rethink their living situations.
Many boomers have spent their working years living in houses that ranged between 1,800 and 2,600 square feet, which were likely perfect for raising their families and living the dream of homeownership. Now that their kids are grown, however, soon-to-be retirees may be considering downsizing their living situations to better accommodate more modest needs. A number are already acting.
As a consequence of this trend—and the fact that many Americans in general are still recovering from the financial difficulties they suffered during and after the economic downturn—there has been a general move over the last few years toward building smaller properties with more amenities. The Conference Board reported that the average size of new homes built between 2007 and 2010 slipped to levels seen prior to the housing market boom and bust. It is further projected that square footage will continue to fall by another 10% through 2015. Much of this shift is being, and will continue to be, driven by boomers who delayed their retirement for strictly financial reasons.
The reasons for the move toward smaller homes are fairly simple. Many boomers may not want to maintain the larger properties. Others could see selling their larger homes and moving into smaller properties as a way to buoy their retirement savings by pocketing the difference between sales and buying prices. As alluded to by the Conference Board's findings, this might be a particularly smart tactic for those who fell behind on their savings efforts during and following the recession. This is also true as home prices continue to rise nationwide and mortgage rates remain at or near their all-time lows.