Baby Boomers Moving South for Bargains

picture of older couple smilingWhen looking around for a place to retire, the appeal of the Southeast is difficult to beat. Warm weather, affordable housing and a competitive cost of living are just a few reasons why Baby Boomers increasingly look to this region as retirement looms. As a location for a second home mortgage, the advantages are clear.

Baby Boomers — those born between 1946 and 1964 — make up a special generation of Americans, certainly. Just as they remade the nation's cultural and political landscape during their youth, as the first boomers began to retire from professional life, one only has to consider where and how they may retire to see that the boomers' profound demographic impact will continue into their golden years.

As for that continuation, many experts see the warm and affordable Southeast as a prime destination for boomers from the Northeast and Midwest, whether that means second homes, snowbird condos or permanent residences. States with lower costs of living such as Florida, Georgia, North and South Carolina and other Sun Belt settings are already among the prime locations where boomers choose to relocate.

Given recent severe winters in the Midwest and Northeast, low interest rates, not to mention the real estate crash, it's a potential money saving opportunity for those with the means to take advantage of the situation. And many boomers have the means to own a second home.

A Consolidation of Boomer Wealth

Baby boomers, born between 1946 and 1964, number 77 million and represent about 37 percent of the nation's total population age 16 or older, according to government statistics. January 1, 2011, officially marked the start of the "Era of the Golden Boomers" when the first of this generation reached retirement age.

Baby Boomers control more than 80 percent of personal financial assets and more than 50 percent of discretionary spending in the United States. They are responsible for more than half of all consumer spending. And since more than 80 percent of boomers own a home, they are the largest group of homeowners in the country, meaning the opportunity to save money by retiring and buying a second home in the South is within their reach.

A Miami Beach Example

"I've been doing this for years, and I notice that suddenly I'm getting all this Miami Beach business," explains Mary, a second home mortgage originator in Dade County Florida with more than 30 years experience on the scene. "A lot of the boomers, particularly from the Northeast, are realizing that Miami Beach is on sale. And everybody loves sales."

Some are looking for an affordable place to visit for the weekend or enjoy during the cold northern winters. They want the convenience of a condo they can lock up and leave. Many are buying conservatively, spending less than $200,000 and often paying cash. Others are relocating permanently. "They want to get away from the cold," Mary says. "They want a place — not too big, not too expensive — where they can visit for weekend, for the winter or for longer."

Second Home Loan: The Power to Buy a Dream

According to CoreLogic's U.S. Housing and Mortgage report, credit-score requirements have risen dramatically over the last few years: in 2005 25 percent of conventional mortgage loans had FICO scores of 780 or higher, but by 2010, 60 percent had scores that high. Boomers are one of the few demographic groups in such an excellent position to take advantage of the more affordable house prices after the real estate collapse. And these falling prices are in the exact region of the country that is so appealing to the nearly 80 million individuals who over the next 20 years will become retirees.

"These are not snowbirds but people buying for the future — for the first time in years, many of these people are able to afford it," says Mary. "Life is simpler on the water, and they are living the dream."

That combination of simplicity and the crucial affordability of second home loans for most Baby Boomers is the reason the Southeast expects to see many more Boomers taking a second look at second homes in the region.

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This information is general in nature, is provided for educational purposes only, and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. Regions neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.