"Housing Trends Among Baby Boomers," a study conducted by Gary V. Engelhardt and jointly sponsored by Radian and the Research Institute for Housing America (RIHA), analyzes two trends.  The first part of the report profiles second-home ownership and mortgage activity associated for homeowners aged 50 or older.  The second portion of the study focuses on the mobility of older households, with a particular interest in quantifying suburban-urban migration.  For older households, mobility is not determined by changes in employment, income, or broader labor-market conditions, but instead by changes in marital status, primarily widowhood, and health and functional status.

 "This study provides a wealth of valuable market intelligence for MBA members.  There have been relatively few scientific studies on second-home ownership and mortgage activity," said Doug Duncan, MBA's Chief Economist and Senior Vice President of research and business development.  "The report indicates that baby boomers are not acting differently than their parents when it comes to second homeownership.  However, the baby boom cohort is so large, even if they follow typical buying patterns, they will have significant impacts on many local housing markets. "

Key findings from the study include:

On Second Home Ownership (based upon analysis from the Health and Retirement study (HRS) data:

6.6 million homeowners aged 50 and older own second homes. 
Second home purchases are geographically concentrated in well known vacation areas. As a result, local and regional economic conditions related to employment growth and migration will have important influences on the collateral value and credit risk of these properties.

Mortgage debt outstanding on second homes is estimated to total $126 billion.  Only a small percentage of second homes owned by those 50 and over have outstanding mortgages.  Second-home mortgage originations comprised only about four percent of overall mortgage market originations.

The typical second home is held for about 15 years, but turnover is high: 45 percent of older homeowners with such homes disposed of them within the six-year window of the data analyzed.  Changes in marital status and health, not income or employment, drive the decision to dispose of a second home and, hence, pre-pay a second-home mortgage.
Most second-home owners make limited use of their homes: one-half spend 2 weeks or less and two-thirds spend 4 weeks or less per year in the home. Also, only 12 percent of owners intend to sell their main home and eventually occupy their second home.

Second homes are a small portion of the typical asset portfolio of an older household and are not important drivers of investment decisions.

On Mobility and Suburban-Urban Migration (based upon analysis of Current Population Survey (CPS) data):

At the national level, empty-nest retirement-age suburban homeowners are not flocking to urban areas in great numbers. In particular, based on the last decade's experience, in a given five-year period, only two percent of all empty-nest retirement-age suburban homeowners can be expected to move to an urban area.

Suburban empty-nesters are just as likely to move to a non-metropolitan area as they are to an urban area.
As a percentage of the stock of all retirement-age homeowners located in central cities, the suburban-to-urban flow of homeowners represents 5 percent.  When the urban-to-suburban flow of empty-nesters is taken into account, the net migration effect from the suburbs to urban area is -7.2 percent. 

Over all metropolitan areas, 76 percent of empty-nest suburbanites who moved to urban areas were white, 60 percent were married, 25 percent were divorced, and just over 40 percent had college degrees and were younger than 55, respectively.
Empty-nest suburbanites moving back to the urban core in the 10 largest metropolitan areas were more likely to be non-white, more highly educated, and to have incomes greater than $70,000, respectively, than movers in all other metropolitan areas.
 

To obtain a copy of the report, please visit the RIHA website at http://www.housingamerica.org/docs/6687_BabyBoomer_WP.pdf

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About the Research Institute for Housing America:
The Research Institute for Housing America of the Mortgage Bankers Association is a 501(c)(3) trust fund. Its chief purpose is to encourage and aid - through grants and sponsored research to distinguished scholars, educational institutions, research facilities, and government organizations - the pursuit of knowledge of mortgage markets and real estate finance. Its mission emphasizes rigorous analysis furthering understanding of how to expand rental opportunities and home ownership among the underserved, and how to encourage equal access to mortgage credit for all qualified borrowers. For additional information, visit: http://www.housingamerica.org/index.htm.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.