Who Will Buy All the Boomer Homes? NewsWire

NEWSWIRE: 1/13/20

• By 2037, an estimated 21 million homes in America will be vacated by seniors as they move elsewhere or pass away. Many of these homes are pricey or in retirement hotspots like Florida, setting the stage for an awkward mismatch between what’s available and what Xers or Millennials want to buy. (The Wall Street Journal)
• NH: This story has been making enough waves on social media over the last month that I thought I should weigh in.
• Bottom line: This story is one-quarter fact and three-quarters hype. You do not need to put this anywhere near the top of your worry list.
• Let's start with the fact part. To be sure, the demographic "baby boom" (born 1946-64) does represent a sort of pig-moving-through-the-python compared with the much smaller generation preceding it (the Silent) and the somewhat smaller generation trailing it (Generation X). So, yes, it logically follows that housing that differentially appeals to seniors will face a tougher market in future decades than it would in the counter-factual case in which the baby boom had gone on forever. 
• That's it. That's the quantitative argument. Now let me explain why you shouldn't worry about it.
• Most importantly, the trend is a lot milder than you might imagine. In every future year, the population of seniors (counted either as 65+, 75+, 80+, or 85+) is projected to grow from one year to the next. In no future year is it projected to shrink. See the first and second charts below. How can this be? Well, first, the Gen-X "birth dearth" has been partially filled in by the immigrant boom of the 1980s, 90s, and 00s (Gen-Xers are today America's most immigrant generation). So birth numbers don't tell the whole story. A lot of that per-cohort gap between Xers and Boomers has been narrowed over their lifetimes.
• Second, by the time the last baby-boom cohort (born in 1964) reaches its accelerating mortality-and-attrition years (in the late 2040s, when it reaches its mid-80s), late-wave Xers and early-wave Millennials will start to turn age 65. The demographic echo boom will thus begin to add larger birth cohorts to the senior population just as the last large baby-boom cohorts begin to shrink in size.
• Third, despite an alarming recent episode of declining U.S. life expectancy, especially among the non-elderly ("Adults Under Age 65 Driving Declines in U.S. Life Expectancy"), life expectancy at age 65 can be reasonably expected to grow in future years. This growth is built into the population projections. This too tends to give an extra little annual nudge upwards to the projected future senior population.
• So the slowing trend not as big as you might imagine. Also, it will happen a lot later than you might imagine. Take a look again at those charts. In the overall 65+ population, it starts slowing in the early 2030s. In the 75+ population, it starts slowing in the early 2040s. In the 85+ population, it starts slowing in the early 2050s. I don't know about you, but this timetable fails to give me the jitters.
• The WSJ article obfuscates these facts. For example, the authors graph the contrasting numbers of Boomer versus Xer births, while never commenting on how this gap was later narrowed. They ominously compare the growth by decade in total new homes sold with the growth by decade in seniors who for any reason move out of homeownership. See the third chart below. This is an unfair apples-to-oranges comparison. Seniors (like younger adults) have to some extent been switching owned homes for rentals--and some switch back again or move for a time abroad.
• Most oddly of all, the WSJ authors spend a lot of ink examining senior communities (whether "active adult" independent living, assisted living, CCRCs, or institutional care)--as if to imply that these are the first communities to implode when the "Boomer bust" arrives. To the contrary. These will be the last to be impacted by the aging out of Boomers. Why? Because the likelihood of living in senior communities rises steeply with age. Only 42% of the senior population is over age 75 (24% over age 80). But 70% of the senior community residents are over age 75 (53% over age 80). See the fourth chart below. As a result, the next 15 years promise to be a boom era for "senior housing"--as the first wave of the baby boom moves into the 75+ bucket. Today's active-adult meccas still have mostly Silent Generation residents. The Boomer wave is mostly yet to come. Many of the big senior developments in Florida report high and rising demand along with future expansion plans. Here, the story really gets the timing wrong.
• Still, doesn't the prospect of a vast Boomer horde decamping for some sort of senior community pose a near-term threat to the market for the suburban McMansions they are selling? The answer is no. Contrary to stereotype, the vast majority of seniors live on their own and age in place. As of 2016, less than 7% (estimated) live in any type of senior community, and of these roughly half live in institutional care settings ("nursing homes") and half in assisted or independent living senior communities. There is another 4.5% who require care from another adult (usually a family member) either in their own home or in their family member's home. Under age 75, you can cut all these percentages in half (or more). See the fifth chart below.
• What this means is that well over 90% of seniors are not transitioning into any type of senior community nor are they compelled to relocate due to disability until they either die or reach their late-80s. And, if anything, retiring Boomers (post-2008) are moving less overall into senior communities--and especially less into nursing homes--than the Silent Generation. Boomers are delaying downsizing--or just avoiding it altogether. In fact, despite favorable demographics and regional booms, the senior housing market remains glutted on a national level. It's not because they are dying. It's because they don't want to move in to begin with.
• What's more, those who do move into senior communities or into relatives' homes due to disability tend to be poorer and thus do less to impact the homes in the higher price ranges. Increasingly, those seniors who can afford to hire home health assistance and "age in place" are doing so. To be sure, there is a bimodal distribution here. A rapidly growing "luxury" market in senior communities is indeed attracting younger affluent seniors, that is to say, the wealthiest of today's first-wave Boomers. Some of these well-off seniors are also voluntarily "downsizing" away from the suburbs into core urban developments rich with amenities (see "Boomers Splurge on Luxe, Urban Apartment Rentals"). See the sixth chart below. But as I have explained (see "Reports of Suburbia's Death Are Greatly Exaggerated"), the quantitative impact of this much-publicized trend is quite small.
• Since the population of seniors is not expected to decline in any future year, the right question to ask is not whether, over time, Millennials will go out and buy all the vacated Boomer homes, but whether the next generation of moving past age 65 (Xers) will want to move in. In the suburbs, I think the answer is mostly yes. Gen Xers (and even many Millennials) are increasingly moving from cities back out to the suburbs--following the phase of life transition forged by earlier generations. Getting younger generations to buy vacated Boomer homes in depopulating small towns and rural areas may be a tougher proposition.
• Gradual shifts in housing prices can be expected to keep supply and demand in alignment. Indeed, this shift has already started. Over the last 5 years, according to Zillow, urban home prices have pulled slightly ahead of suburban home prices. And over the last 20 years, rural  homes prices have experienced a more profound devaluation against both urban and suburban regions. See the last chart below.
• Keep in mind that there is plenty of uncertainty here. By the 2030s, a profound shift in urban land use policy that opens coastal cities up to more housing could work to depress housing prices in the suburbs and maybe cut them drastically in rural areas. On the other hand, a critical mass of new Xer and Millennial communities in middle America could generate a new wave of price pressure in what used to be fly-over country.
• And yet another possibility: Rising rates of inter-generational living get more Xers and Millennial accustomed to working and living where their senior parents are already located. Already today, roughly 20% of seniors live with younger adults, typically children or grandchildren. (Three-quarters of these seniors are heads of household.) So in one out of five instances, the passing of the home to the next generation is already prepared. 
• Whatever happens, one thing is certain: It will not happen suddenly. It will be more like the shifting of tectonic plates, observable only after filtering out all the din of faster-paced political and economic cycles. It will not shake you out of bed one morning. Please, cross it off your worry list.

• From 2016 to 2017, the cancer death rate in the U.S. saw its biggest one-year drop ever (2.2%). Cancer mortality rates have fallen continuously for about three decades, in part due to lower smoking rates that have helped reduce deaths from lung cancer. (CA: A Cancer Journal for Clinicians) 
• NH: When it comes to cancer, there is a lot of phony news about improvement in "survival rates." Typically it turns out that more people survive because more people are diagnosed due to more frequent or sensitive screening techniques. Since few of these people would likely have been harmed by the disease, it only looks as though "survival" is rising. Prostate and breast cancer numbers are notoriously flawed for this reason.
• The mortality rate, however, is the gold standard. So the broad improvement noted in this article is genuine. Through most of the 20th century, the overall cancer death rate gradually rose. Starting in the early 1990s, it started on a decline which has accelerated in recent years. 
• The dominant driver of both the rise and the fall is mortality from lung cancer, which has followed smoking trends with about a 20-year lag. (The U.S. adult smoking rate began falling in the early 1970s.) While mortality from breast, prostate, and colorectal cancer have also declined over the last 30 years, mainly due to better screening, these rates of improvement have slowed. Yet the good news from lung cancer, because it kills so many, has overshadowed any of the other disappointments. To quote from the report: "Lung cancer still caused more deaths in 2017 than breast, prostate, colorectal, and brain cancers combined." It may be, of course, that the decline in smoking is causing some of the observed improvements in the mortality of other cancers as well.
• Success in the actual treatment of potentially fatal cancers--as opposed to improved lifestyles and better screening--continues to be elusive. "Cures" are definitely not driving the overall improvement. There are exceptions, however. The discovery of so-called check-point inhibitors has caused a dramatic reduction in mortality from melanoma of the skin over the last decade (7% reduction per year). This once deadly disease now has a 5-year survival rate of 92% for those diagnosed with it, compared with a 16% survival rate for lung cancer after diagnosis.
• While all this is great news, the fact remains that cancer remains more resistant to treatment or lifestyle changes--with the important exception of tobacco use--than other major causes of death, such as suicide, drug and alcohol abuse, and cardiovascular disease. And it is these other major causes that have been responsible for America's shocking recent regression in age-adjusted mortality. (See "Death Becomes Us... Mortality Increases.")

• In China, a 31-year-old single woman is suing a hospital for refusing her request to freeze her eggs. It’s China’s first legal challenge of a law that limits fertility treatment to married couples and is raising broader questions about reproductive rights as the country faces a fertility crisis. (The Wall Street Journal)
• NH: The case of Teresa Wu neatly encapsulates the social bind China has found itself in. Under current regulations, unmarried women may freeze their eggs only for health reasons. Anyone who doesn’t fit this criterion has to head overseas (and many do). When Wu made her request, the doctor who treated her “urged [her] to get married soon” instead. The demographic realities facing China are stark: The country has one of the lowest fertility rates in the world, and this year, its median age is expected to overtake America’s.
• Something’s gotta give, and it’s not going to be all these women deciding to get married tomorrow. But the PRC is loath to do anything that lessens their iron grip on their citizens’ life choices, either. (See “China Embraces Pronatalism—Decades Too Late.”) While they’re willing to introduce policies to goose the birth rate, they’re trying to do so in a way that conforms strictly to traditional Confucian family norms. Good luck with that!
• For the first time since the early 20th century, a greater share of people are now dying at home (30.7%) than in hospitals (29.8%). In part, this shift reflects the wishes of the dying, but it is putting tremendous strain on families who aren’t prepared to take care of their loved ones in their final days. (The New England Journal of Medicine)
• NH: This study isn’t surprising. Way back in 2013 and 2014 I was predicting Boomers would want to die at home rather than tangled with IVs in a hospital bed. (See “Is the Death Care Industry Dying?” and “Coming Soon: Health Care Anywhere.”)
• The authors used mortality data from the National Center for Health Statistics. The NCHS designates five places of death: medical facility, decedent’s home, hospice facility, nursing home/long term care, and “other.” The data show that, from 2003 to 2017, deaths in the home and hospice facilities have risen, while deaths in hospitals and nursing homes have declined (see chart below).
• This dying-at-home (or in home-like settings) trend is part of a broader social shift toward focusing on family and home. Over the last couple of decades, Boomers have shown a growing attachment to their dwellings and their personal spaces. They want to "age in place" naturally rather than endure anything resembling institutional living. (See “There's No Place Like Home,” “The Future of Retirement Communities,” “Boomers Say ‘No Thanks’ to Downsizing.”) Boomers see the hospital as soulless and technocratic. The home is where they can be authentic.
• Yet all this authenticity puts a burden on loved ones. The NYT caught wind of the study and pointed to some of the less lovely consequences of home deaths: endless home visits by professionals, months without sleep, worrying about treatment options. From managing pain to managing emotional stress, families must now deal up close with death like their premodern ancestors. The Boomer choice to die at home will weigh heavily on their Gen-X and Millennial children.

• On college campuses nationwide, growing clusters of Bluetooth sensors and wi-fi networks are tracking students’ every move. Administrators say that these systems are meant to support student success, but to critics, the 24/7 surveillance screams Big Brother. (The Washington Post)
• NH: No longer will students claim they were sick, now they will claim their phone has died. On numerous occasions, I’ve discussed the growing creep of surveillance technology, and this is just another example of its increasing influence (see “Don’t Go to That College Party...Your Parents Are Tracking You,” “We Are Being Watched By Nearly 1 Billion Surveillance Cameras," “The Rise of ‘Total Tech’.”)
• The gist of the article is that colleges are partnering with a handful of startups to track students’ locations. By installing Bluetooth devices in classrooms, students download an app that automatically syncs with their phones and marks their location. The system is mainly being used to take attendance, though some schools have put the devices in places other than classrooms to have a full map of students’ whereabouts.
• College students themselves may not mind. Millennials view surveillance technology as a comforting parent (it is often literally their parent) always watching and keeping them safe. One of the companies claims they have an algorithm to tell if a student is depressed by tracking their movements; the school can then "intervene." In any event, Millennials are accustomed to lots of rules dictating their behavior. 24/7 monitoring just makes those rules (regarding where you have to be when) more universally enforceable and thus less gameable.
• Those who protest are more likely to the Boomer and Gen-X professors. Hey, man, what's with the Big Brother crushing my freedom? As the WSJ points out, when UNC first installed the system, it was the dean of journalism who instructed a student to tear the Bluetooth device in her classroom off the wall. Boomers may be pleased to see effortless and absolute compliance with attendance in their classes. But what they really want is more than attendance. They want enthusiasm--which is probably something that this "Black Mirror" technology is incapable of generating. 
• According to a recent report, “sandwich” caregivers provide an average of 24 hours of care each week in addition to working 36 hours at paid jobs. Their ranks are dominated by Gen Xers, who are also the generation most likely to report experiencing work or financial strain as a result of their caregiving responsibilities. (National Alliance for Caregiving & Caring Across Generations)
• NH: Sandwich caregiving is a topic we’ve covered often over the years, most recently through the perspective of stressed-out Xers explaining just how hard it is. (See “Xer Shares Her ‘Sandwich’ Experience” and “Xer Contributor Shares Tales of the Sandwich Generation.”) Now comes a new report offering some hard data behind the phenomenon. 
• There are no shocking revelations here. But the picture the report paints is still sobering. Sandwich caregivers are caught in a constant battle between the responsibilities of paid work and caregiving. Many are forced to miss work or scale back their hours at a time when they’re in their prime earning years. The paid care options at both ends—direct-care workers for seniors and childcare for young kids—are increasingly pricey, if not downright unaffordable. On average, those taking care of older loved ones spend $7,000 out-of-pocket every year on costs related to caregiving. Fewer than one in five (19%) feel qualified to do the medical or nursing tasks they’re carrying out. The majority (61%) are women, and just under half are Xers.
• The report also says that most sandwich caregivers (58%) have other unpaid caregivers helping them (presumably other family members). This is more common among Hispanic sandwich caregivers, presumably due to a stronger cultural emphasis on family bonds. Not coincidentally, Hispanic sandwich caregivers are less likely to report high levels of emotional stress and financial strain, even though their median household income is considerably lower. It’s just another illustration of how important strong family and community ties are becoming to the expensive, time-crunched juggling act that is modern life. More and more often, home is where that extra hand around the house or emergency loan is coming from.
• Since 1996, the average price for a top-100 concert tour ticket in North America has surged more than 250%. And they aren’t done climbing: Executives at Ticketmaster, which dominates the ticketing market, insist that high prices on the secondary market are evidence that artists aren’t charging enough. (MarketWatch)
• NH: Want to go see U2? Taylor Swift? How about The Rolling Stones? It’ll cost you. Tickets for The Rolling Stones, who had the highest-grossing tour in North America last year, averaged a hefty $226.61. And other big names aren’t much cheaper. Nine of 2019’s top 10 tours had an average ticket price of over $100.
• Why have concerts gotten so expensive? In part, you can thank the streaming era. Artists can reach more listeners around the world than ever before, but they’re being paid tiny fractional amounts for it. Touring has become a far bigger share of their income. Promoters, meanwhile, are finding more ways to upsell tickets. The “premium economy” of concert tickets is VIP packages and meet-and-greets, which are getting snatched up by fans whose loyalty is, well, priceless. It’s the perfect match of sellers to buying power: Most of the artists charging eye-watering prices are Boomer favorites who last topped the charts in the ‘80s.
• Truth is, the execs are right. Ticket sellers can charge as much as the market will bear, and there’s little standing in the way when Ticketmaster controls 80%--yes, 80%--of the ticketing market. High upfront prices might be preferable to gratuitous “convenience fees,” and they could even discourage some scalpers. But let’s be honest. Sure, people will pay absurd amounts to see their favorite band. But nobody’s really happy about it except for Ticketmaster.
• The number of births in Japan, which is estimated to be below 900,000, is at its lowest since 1874. At the same time, the number of deaths has risen to nearly 1.4 million, setting the stage for a demographic squeeze that is looming ever-larger as the population shrinks with no end in sight. (The New York Times)
• NH: We could see this coming decades ago: That's what's great about demography, isn't it? And now it's crunch time. In 2019, Japan's births were the lowest since the semi-feudal era of the Meiji Restoration, when Japan's population was 70 percent smaller than it is today. Meanwhile, the number of deaths in Japan's aging population continued to rise and the net inflow of immigrants (while rising) remains minimal. So Japan in 2019 had 512,000 fewer people than in 2018. As the NYT author notes, that's like losing a city roughly the size of Atlanta in one year.
• This story simply updates and adds color to a dynamic that we cover regularly. See "Japan Deals With Sever Population Decline and Rural Flight" and "Japan Birth Rate Hits a New Low."

• The title of author Susan Jacoby’s recent op-ed says it all: “We’re Getting Old, But We’re Not Doing Anything About It.” The nation, she insists, is deeply in denial about the oncoming flood of “the oldest old” and the impact an aging society will have on families and the health care system. (The New York Times)
• NH: Susan Jacoby, a prolific free-thinker and secular progressive, has recently taken to writing about old age. Her most recent book is Never Say Die: The Myth and Marketing of the New Old Age. She writes here about demographic aging in a grinding, downbeat manner. She freely applies the word "crisis" to everything (inevitably, she compares demographic aging to "climate change") and exhorts America to wake up to how "the aging of America demands serious reconsideration of the way we live."
• But all of her examples of critical challenges are trendy and obvious--like assisted suicide, the burden facing caregivers for the elderly, and silly euphemisms for aging. She complains several times about Medicare's failure to cover long-term care. But what about deeper challenges? Like how to afford the vast fiscal burden of all the healthcare services that the government does cover? Or how to tilt the economic playing field away from the old and back toward the young? (See "The Graying of Wealth... in One Picture.") Or how to build a national future in which younger generations are happy to raise more children? Here, Jacoby has almost nothing to say.

DID YOU KNOW?

How I Made My Billions. With income inequality a hot issue on the campaign trail, the ultra-wealthy are facing intense scrutiny over their money and the system that helped them make it. Did the world’s billionaires amass their wealth fairly? An analysis in The Economist digs into this question—and the answer is mostly, but not all. There are around 2,200 billionaires, and The Economist estimates that three-quarters of billionaires’ wealth in advanced economies was accumulated fairly. A third was inherited. Some billionaires, however, engage in “rent-seeking”: gaming the system to gain more wealth than they’ve earned and reduce competition. This behavior is common in industries like defense and construction, and arguably, also among the world’s largest tech companies. It varies by country: In Sweden and Germany, rent-seeking industries account for relatively low shares of billionaire wealth. But in the United States, they produced one in five billionaires and account for a full third of billionaire wealth.