Retirement Destination
6:30 am
Mon July 8, 2013

Real Estate Study Inadvertently Reveals South Florida Population Isn't THAT Old

Florida has a higher percentage of people 65 and older than any other state. But South Florida's reputation as a retirement destination may not be accurate.
Credit Lee Cannon
Listen to radio story here.

The California-based real estate analysis company RealtyTrac has released a list of the nation’s top “Retirement Hot Spots for Real Estate Investing.” No surprise, Florida figures prominently - 7 of the top 15 cities are in the Sunshine State.

What might be surprising though, none of those are from South Florida.

“Delray is one word, right?” asked RealtyTrac vice president Daren Blomquist, who agreed to look up some of the local cities you might expect to be on a retirement-related list. Delray Beach, for example.

“Yeah,” said Blomquist, “we’re showing that capitalization rate on rental property is 8% so that’s really good.”

A Method

Some background here: Baby boomers will be retiring through 2029, a RealtyTrac press release explains, “ensuring plenty of demand for both rentals and owner-occupant purchases in (retirement destinations) for the foreseeable future.”

The Retirement Hot Spots for Real Estate Investing list looked at cities with two metrics in mind. Number one, is there a significant 65 and older population there? And number two, can you make money on real estate there?

The 8% “cap rate" in Delray Beach is really good. Only five of the top 15 cities had higher rates of return on rental properties. And, according to RealtyTrac data, the median home price in the city increased from $127,170 in 2012 to $156,130 in 2013, a 22% increase. Only four of the top 15 cities performed better.

Great. But the problem for Delray Beach: “We’re showing 22% of the population there is 65 or older.”

For RealtyTrac’s purposes, for a city to truly be a retirement “hot spot” at least one in three residents needs to be 65 or older.

Surprisingly, neither Aventura, Boynton Beach, nor Boca Raton (respectively 26.6%, 21%, 21.4% 65+ populations) were old enough for the list.

In other words, “I guess maybe the issue that kept those cities out of the list,” laughed Blomquist, “is that the population is too young.”

Florida Standards

Senior citizens make up 17.3% of Florida’s population according to the most recent U.S. Census data. That’s a higher percentage than in any other state (West Virginia and Maine come next at 16% and 15.9%).

Compared to the state as a whole, yes, Delray Beach, Boca Raton, etc. are relatively old.

But not when you look at some of the state’s oldest cities. We’ll throw out Sun City Center, a Census-designated place with a website that advertises “A 55 and Better Community.” The 65 and older crowd makes up 76.9% of the population and is the highest in Florida.

When you look just at incorporated municipalities Longboat Key, Palm Beach and Lady Lake (in Lake County) have some of the highest senior population by percentage in the state: 61%, 56% and 55%.

(Financially, Palm Beach didn’t measure up for RealtyTrac’s list. The median home price dropped almost 21% in the last year and cap rate was barely 3.5%.)

Stanley K. Smith is an expert in population studies at the University of Florida’s Bureau of Economic and Business Research. He generally looks at senior populations by county. 

He says Miami-Dade (now 14.5% 65 and over) and Broward (14.7%) have been shifting younger over the last 20 years. Palm Beach (22.1%) has held about the same, but by “Florida standards” simply isn’t that old.

“So I’m not sure the perception that South Florida is a retirement destination is really valid,” said Smith.

 

Courtesy of RealtyTrac