Boomer Wealth Is Surging in Florida, Leaving Workers Behind
(Bloomberg Businessweek) -- Many older Americans have reaped an unexpected pandemic bonanza, thanks to a combination of a stock market surge and rising home prices. That good fortune is evident in the St. Armands Circle shopping district in Sarasota, Fla., where visitors stroll past statues of Venus and Dionysus and lunch on Cuban sandwiches and sangria. The number of homes in the area selling for $3 million or more has shot up to 355 so far this year from a pre-pandemic 81 in 2019. And many of the buyers are of retirement age, says Drayton Saunders, president of Michael Saunders & Co., a real estate broker specializing in luxury properties.
A Covid-induced boom in early retirements is exacerbating America’s inequalities, especially along this stretch of the Gulf Coast. Sarasota and its environs are seeing an influx of cash-rich baby boomers and work-from-home professionals that’s pricing younger residents out of the housing market. Some also worry that a bigger senior population may worsen Florida’s historic difficulties in passing taxes for school and infrastructure projects. “They typically vote, and they may not vote for your schools unless their grandkids are in your schools,” says Jerry Parrish, chief economist of the Florida Chamber of Commerce’s research foundation.
By 2045 a quarter of Sarasota County will be 75 or older, and community activist Jon Thaxton wonders where the area will find enough care workers—often low-paid and with limited transportation—to staff all the luxury retirement homes “popping up like mushrooms after the rain.” An executive at the Gulf Coast Community Foundation, a civic advocacy group, he sees the coming crisis as a harbinger of a nationwide problem. “Our age demographic just happens to be 15 years ahead of the rest of the country,” Thaxton says. “We might be the canary in the coal mine.”
The obvious health toll notwithstanding, older Americans have largely prospered from government efforts to salve the economic pain Covid has caused. Boomers (born in 1946-64) accumulated more than $1.6 trillion in excess savings in the past two years, almost double what Generation X (born in 1965-80) put away, according to Federal Reserve data. Boomers also saw the biggest overall gain in wealth during the pandemic, with their combined wealth growing by $12.8 trillion, or about 23%. They edged out Generation X by about $100 billion, Fed figures show, but because that younger set has fewer people overall, it realized a larger per-capita wealth gain.
Not all seniors are feeling flush. The wealthiest 5% of boomers hold almost 60% of that generation’s financial assets, according to the National Institute on Retirement Security. Still, a retired household in 2016 had double the financial and nonfinancial assets of one in 1989, even after adjusting for inflation, a 2019 study by the Federal Reserve of St. Louis shows. The recent runup in housing and stock values likely accelerated that trend, says study co-author YiLi Chien.
Demographic data aren’t available on all the new transplants to Florida, but many appear to be early retirees and older seniors who are wealthier than newcomers have been in the past, Parrish says. Anecdotal evidence from Sarasota backs that up: Boomers are walking into Kevin Campbell’s RV dealership in an industrial part of town and dropping $150,000 in cash on a motor home. A dozen years ago, they’d borrow against homes and investments to buy, he says. A half-hour south in Venice, another city in Sarasota County, a small wealth management firm called FourThought has a new unit serving people with assets of $5 million or more. “What I’m seeing is a lot of the folks that are in their late 50s, early 60s that were looking at their 401(k)s, and suddenly their 401(k) is worth $2 million, and they’re saying, ‘Hell, I can do this,’ ” says managing partner Scott Pinkerton.
Theresa LaSalle, 65, ditched a corporate marketing career in Dallas last year for semiretirement in Sarasota. Travels in Europe fueled a passion for wine, so she bought a new home in a gentrifying neighborhood and opened a wine bar near downtown. “It was just time,” says LaSalle, who made the move with her husband, a government contractor. “I really wanted to do things for myself. I had the resources available.” She acknowledges that people like her are driving up housing expenses for locals, including her two part-time employees, who share apartments with friends or family. “The costs are just too much for one person to manage,” she says.
The combination of soaring housing costs and abundant but generally low-paying hospitality jobs is creating an affordability crunch in this peninsular paradise. Florida’s average wage fell to 87.2% of the U.S. average in 2020, matching its lowest level since 2001, according to an August report from the Florida Legislature’s Office of Economic and Demographic Research. The median sale price of a home in Sarasota County hit $407,000 in September, up almost 28% from a year ago, numbers from the Realtor Association of Sarasota and Manatee show. More than one-third of households in the county are “cost-burdened,” meaning they spend more than 30% of income on housing, says Thaxton, who’s also a former county commissioner. Rents were up 20% over last year as of this summer, according to a report in the Sarasota Herald-Tribune.
Marie Barrow, 34, who grew up in nearby Bradenton, moved back to Sarasota six years ago from Chicago and works in one of many small shops that ring the traffic circle at St. Armands. On a slow weekday morning, she scrolls through a directory of available apartments and comes upon a luxury complex that popped up near the building where she lives in a little studio: It’s at least $2,300 for a one-bedroom, she laments. “I would love to own property in Sarasota, but I can’t even fathom it,” she says.
At the downtown bus station a few miles away, sandwich shop worker Joanne Tillett, 54, says she feels trapped in the same 500-square-foot unit she’s been in for 10 years because rents have soared. “I can’t afford a car,” she says. “Honestly, I’d love to move out of Florida. It’s awful.”
Read next: How American Billionaires Like Phil Knight Pass Wealth to Heirs Tax-Free
©2021 Bloomberg L.P.