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In 1975, when the baby boomers were babies booming the rental market, apartments were, let’s say, basic. Wall-unit air conditioners were an upgraded amenity, in-unit laundry was a luxury, and recreational facilities were limited to a swingset and maybe a pool. Package-delivery rooms, yoga studios and concierge services? Forget it.
Of course, median rents were $212, so the boomers stashed cash for their pending home down payments.
Today, boomers re-entering the rental market encounter a much different scene. Sure, average rents are nearly six times higher, but for that, boomers get smart apartments with tech-enabled security, clubhouses with zero-entry pools, salons and even cafes. Or they have access to single-family rental homes near family and friends in their home communities. No wonder baby boomers represent a large and growing demographic of the multifamily housing market.
According to a 2022 study from Harvard University’s Joint Center for Housing Studies, rentals among 65+ households rose 43 percent from 2009 to 2019. As the study noted, the increase was due partly to the generation’s size. However, the rental rate also increased. The study predicted that “the growth in older renters is set to maintain its rapid pace.”
So why are baby boomers growing more comfortable with renting? And how can multifamily properties attract renters from this increasingly valuable demographic? Let’s tap into the booming boomer rental market.
Why baby boomers are renting
Baby boomers are fortunate. They have the most options in a current housing market that constrains others with high interest rates and home prices and low inventory. Boomers are staying in their homes longer, according to CoStar, but also represent the largest home-buying constituency. They’re renting at higher rates than ever. How can all three be true?
To begin, it’s a huge generation with a lot of homeowners, capital and equity. Baby boomers hold the most home value of any generation; their homes were worth $18 trillion in 2023, according to Redfin. Flush with equity, some are capitalizing on home prices that were up 4.8 percent year-over-year in March 2024, according to the National Association of Realtors, and selling. They take the profit and invest in a new home, park cash in high-yield accounts, or rent and invest in lifestyle choices. Perhaps they choose a mix of those options.
So why is renting so popular? It’s an attractive way to prioritize lifestyle. Many boomers transition from homes that require high upkeep costs to rental properties that are easier and often cheaper to maintain. As Redfin found in 2023, the typical home costs 25 percent more per month to own than to rent. By renting, some boomers choose to trade responsibility for something more carefree: the ability to travel, spend more time with family and friends, or pursue a passion project.
Some U.S. boomers have another reason for renting. According to Pew Research, older Americans are far more likely to live alone than their international counterparts. While 38 percent of older Americans worldwide live with extended family, just 6 percent of Americans do. With 27 percent of Americans 60 and older living alone, renting becomes a more practical option. Still, this demographic is discerning, and attracting boomers to the rental market requires a unique approach.
What do boomers want in a rental?
First, let’s distinguish between senior rentals and the boomer market. The senior housing market, which incorporates independent and assisted living properties, is recovering from the pandemic and draws a different demographic. Boomers are more likely to rent as a lifestyle choice but don’t require the facilities of senior properties. They’re renting for the same reasons as millennials and Generation Z but with different priorities.
As we’ve written before, millennials and Gen Z prioritize technology, community and sustainability in rental properties. Though crossover certainly exists with boomers, their rental preferences trend toward more space, security features and recreational opportunities. Community is one feature that appeals to all generations.
A popular option for baby boomers is the single-family rental market. This surging market merges an unattached residence, garage and yard space with the convenience of onsite maintenance. For many renters, not just boomers, this is the perfect transitional space. Young renters test the single-family lifestyle before buying, and boomers enjoy the privacy to which they’re accustomed without the hassle of maintaining it.
In this case, single-story rentals, such as ranch homes, appeal to boomers who want to age in place. As a result, we predict the build-to-rent market will continue growing. We’re not alone. CoStar noted that financers recently have invested $3 billion into the build-to-rent market. We expect boomers to comprise a significant segment of that market.
On property, boomers demand much more than they did in 1975. They prefer security features (and are willing to pay more for them), robust outdoor spaces, and places to gather. They’re generally less concerned with nightlife options and highly rated schools and value a key trait their homes gave them: peace and quiet.
For boomers, it’s about choice
The baby boomer rental market isn’t about buying a home and retiring to the Sun Belt, though that’s one choice. For boomers who rent, the decision often remains local. Many boomers enter the rental market in their neighborhoods, close to family, friends and, yes, work. They simply choose to make a new home in a rental space that might offer more options outside the home. That’s ultimately what boomers want.
“Boomers are all about having choices,” Dallas architect Ricky Berg told Realtor Magazine. “They’re accustomed to having what they want when they want it.”
Michael H. Zaransky is the founder and managing principal of MZ Capital Partners in Northbrook, Illinois. Founded in 2005, the company deals in multifamily properties.
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