Retiring Baby Boomers Create Housing Boomtowns
NEW YORK ( TheStreet) -- Wondering where to invest in real estate? Go where the retirees are going.
Baby boomers -- those born between 1946 and 1964, constituting roughly 75 million people -- are retiring in increasing numbers, prompting a new cycle of growth in housing markets that are popular with seniors.
RealtyTrac is out with a list of the 15 Top Retirement Hot Spots for Real Estate Investing.
RealtyTrac looks at all cities with a population of over 10,000 and where at least 33% of the population are 65 years or older. It then looked at cities that had a positive capitalization rate -- net annual rental income as a percentage of the purchase price. This is what helps investors determine if a property is viable.The report found 40 cities nationwide with at least 33 percent of the population age 65 or older. Among these 40 cities, 25 posted annual increases in median home prices, and 27 had a positive capitalization rate -- which indicates rentals in those markets generate positive cash flow. RealtyTrac sorted the list by annual price appreciation to get to the top 15. "These popular retirement cities will very likely be an area of growth in the housing market over the next 15 years as baby boomers retire in greater numbers," said Daren Blomquist, vice president at RealtyTrac in a press release. "The baby boomer generation started retiring in 2011, a trend that will continue at least through 2029, ensuring plenty of demand for both rentals and owner-occupant purchases in these markets for the foreseeable future. Topping the list was the central Florida town of Dunnellon, where 38 percent of the population is retirement age or older. Home prices in the town jumped more than 31 percent in the past year. The estimated cap rate in Dunnellon is more than 10 percent based on the average rent for a three-bedroom home there, according to the study. Given the low cost of living and warm temperatures, it is not surprising that six of the top 15 cities are in Florida. Check table below for the top 15. --Written by Shanthi Bharatwaj in New York. xcv
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