Despite national reports citing the real estate frenzy is approaching a freeze, there is a rising demographic that will continue to heat the market: The Baby Boomers. As they pursue their quest for the ideal vacation or retirement home, analysts suspect that this equity-rich group of retirees will keep the momentum of the market at a steady pace.

The historical components of the last 50 years helped to shape the profile of the Baby Boomer. Absorbing the examples of their parents, who experienced the economic constriction of the Depression and rationing of World War II, Boomers have been traditionally conservative spenders. Snapping up real estate, flipping properties and trading up houses during the time when Boomers were having their children in the late 60s and early 70s was not common. All changed with the red hot economy of the mid 90s. Riding the wave of the peaking economy, the conservative spenders soon became savvy investors. Though the sizzling stock market burned out with the dot-com bust of the late 90s, low interest rates coupled with amended tax laws fueled the housing boom of the early 2000s. With children exiting college and retirement on the horizon, Boomers redirected their investing in real estate.

New research indicates that the number of second homes purchased between 2000 2004 has nearly doubled. The value of homes doubled as well, with the average home rising 55% during these 4 years. Keunwon Chung, a statistical economist at the National Association of Realtors, says the Baby Boomers, especially those with above average incomes, are primarily motivating the second home market. Chung cites one reason these Boomers are snapping up homes is to diversify their financial portfolio. Another reason is to position themselves for their golden years. Tax friendly retirement states such as Florida, Arizona, and Nevada already have witnessed an explosive growth in both home construction and appreciation. Florida experienced a 25% increase in home prices last year, with one in five of those homes being purchased as a second home or investment property. Nevadas home prices increased 17%, with a comparable rate being purchased as an investment property. The U.S. Census Bureau expects this rate to steadily continue and predicts second home purchases from Baby Boomers will reach 6.4 million units by 2010.

Most Baby Boomers are seeking luxury in their second home purchases. According to a Coldwell Banker survey, the Boomer generation wants luxurious homes and wants to remain active. Neil Howe, author and expert on generational theory, confirms this by stating, Boomers want to live somewhere where they can remain active. They want to be near cultural and spiritual hubs that keep them connected with community and culture. And this generation can afford their desires. From the accumulation of wealth through the stock market, home equity, and inheritance, along with the earning power of working during retirement years, Boomers have more money than any previous retiree generation. Studies from Harvard, NAR, and NAHB all agree that Boomers will most likely use their cash resources and home equity to purchase multiple residences that focus on prime location and amenities. While condos traditionally filled this requirement, a growing number of Boomers are now turning to condo hotels, condotels, and other various resort style residential options.

Condo hotels appeal to Boomers because it markets luxury and location, the two main ideals these Boomers are looking for to sustain their dynamic lifestyle. Why buy a condo in town that sits empty for of a year when they can own a condo hotel, have to five star amenities available to them, be centrally located in a top vacation destination, and receive rental income? says Steven Roszell, owner of CondoHotels.com and HotelsForSale.com. The rental of the condos, provided by the hotel management company when the condo is unoccupied, is another main attraction of condo hotels for Boomers. Bob Waun, of vacation-finance.com, says that although Boomers desire resort style living and luxurious amenities, not all Boomers may afford it. Says Waun, Fewer than 20 million (26.5%) of US Boomers will be wealthy enough to afford a whole-ownership second home without rental income. But because of the rent potential, condo hotels offer subsidized luxury that will be a growing choice among savvy Boomers. Waun also believes sheer Boomer demand will motivate the condo hotel market. He cites, if only 1% of this generation demands condo hotel as a second home option, 1.45 million units will be needed. Thats 96,000 condo [hotel units] per year, every year. for the next fifteen years that Boomers will be retiring. Considering that currently the US has only a handful of markets for condo hotel resorts, it is probable that that demand will supersede supply.

78 million US Baby Boomers retiring over the span of the next 15 years will undoubtedly make an impact on the real estate market. With the oldest of the Boomers turning 60 this year, realtors are getting reading to accommodate their demand. We will see large market cycles in the condo hotel market, says Roszell, and CondoHotels.com is ready for it. Though explosive appreciation and development is not anticipated, analysts do agree that the Boomers will help sustain a buoyant real estate market.