This is not your grandparents' middle-aged generation. You are living longer and healthier, defying advertisers and salespeople with your buying habits. In years past, Boomers were ignored by advertisers in the automotive industry, who were clamoring over the millennial generation – and still do. Meanwhile, real estate treated millennials the same way, aggressively changing their marketing strategies to appeal to them. But the reality is, according to a recent Diversity Best Practices report, you are driving new car sales and building the home buying market.
Boomers are changing expectations in the consumer markets these days.
The car buying market
If you have a sour taste in your mouths following the financial crisis in 2007, you aren't acting like it. Your spending habits have remained steadfast, especially in the auto sector.
In fact, according to research by the National Automobile Dealers Association, the average age of people buying new cars is 51.7 years of age.
This research continues a trend from 2010, when a JD Power and Associates report cited by Auto Blog found that 62% of new car buyers were aged 50 and up.
That was significant even then, as it represented a 39% increase over a decade earlier. In an interview with Bloomberg, John Morel, a market researcher for Honda, explained that while advertising may be geared at millennials, you are buying most of the cars.
"One of the dirty little secrets of the auto industry is all these cars are positioned in advertising and public relations as something a 25-year-old will buy," Morel stated. "But your propensity to buy a car at 25 is roughly a quarter of what it is at age 65. By definition, very few cars sell in high volume to 20-somethings."
AARP found in 2013 that 66% of all new car purchases came from you. The AARP report also cited a report by the University of Michigan's Transportation Research Institute that people aged 55 to 64 years will buy the majority of cars. It was previously believed that Boomers were exiting the car buying market, but according to Steven Szakaly, chief economist for the National Automobile Dealers Association, at the CAR Management Briefing Seminar, this is more than a passing trend.
"It takes four millennials to replace one boomer," Szakaly commented. "There's going to be this gap between baby boomers and millennials."
He later said that millennials are in fact, not entering the car buying market.
"We firmly believe millennials will purchase vehicles. But they're going to purchase them later."
"You are buying more homes than any other generation."
The home buying market
While real estate agents transform their sales practices to become more appealing to millennials, you are still buying more homes than any other generation. According to a Builder Online report, people over 50 will buy more than 50 percent of all new homes from now until 2020. In fact, from now until 2030, there will be approximately 30 million more Baby Boomers, so this trend may actually increase – considering there are currently 76 million seniors.
This generation just has more spending power than others, particularly millennials. Between student loans, higher costs of living and stagnant wages, millennials are simply not buying homes en masse like you.
Impact on the economy
Baby Boomers in the U.S. have been the dominant force on the consumer markets for more than 30 years. In fact, according to MGI research report cited by McKinsey from 2008, even then you were beginning to work longer, earn record highs in income and spending just as much. This trend has only become more magnified as Boomers have begun to live longer and become a larger part of the population. By 2020, the U.S. Census Bureau speculates that Boomers will account for 20% of the population, compared to only 13% in 2010. There is no telling what your economic impact could be with this large of a percentage of the population.
These are just two examples of trends among Baby Boomers. But the message is clear: the older generations have liquidity and you want to invest in new – and large – assets like cars and homes. So what does this mean for you?
Depending on your age and the amount of work years you have remaining, this news may be valuable to you. If for nothing else, it may change your spending and saving habits. Cars and homes are the top two assets people own, and when you are making purchases of this magnitude at your ages, it is a sign that your income growth is still strong – and possibly getting stronger.
Regardless of your age, you should consider your financial circumstances thoroughly. That is where our team can help. We can sit down with you on a one-to-one basis to go through all available options that address your specific financial needs. Specifically, when to buy and what to buy.