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May 29, 2024

Baby Boomers Continue To Dominate Housing Market, Preventing Downsizing and Access for Younger Generations

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Jan 17, 2024

Introduction

A new study released today by Redfin, a national real estate brokerage, reveals that Baby Boomers (those born between 1946 and 1964) own a disproportionate share of large, single-family homes compared to younger generations. This phenomenon of “generational housing inequality” is preventing younger Americans from being able to afford and access homes that meet their needs.

Key Findings

The Redfin study analyzed census data and found the following key results regarding Baby Boomer homeownership patterns:

  • Baby Boomers own 32 million homes nationwide that have 3-4 bedrooms. In comparison, younger millennials own just 16 million similar-sized homes, even though there are slightly more millennials than Baby Boomers.
  • The average Baby Boomer home has 2,100 square feet of living area. Millennials with children live in homes with an average size of 1,800 square feet.
  • 60% of Baby Boomers are considered “empty nesters”, meaning their children no longer live at home. However, they continue residing in the same large single-family homes.

Downsizing Resistance

Despite having more space than they need, Baby Boomers show reluctance to downsize to smaller homes. Redfin hypothesizes three primary reasons for this trend:

  1. Financial Security – Homes often represent a majority of Baby Boomers’ net worth. They are hesitant to sell at the risk of losing this asset.
  2. Low Inventory – The current housing shortage provides few options for Boomers to downsize into, especially smaller affordable homes.
  3. High Moving Costs – The hassle and taxes associated with selling a long-time home and purchasing a new one is unappealing.

Impacts on Younger Generations

With Baby Boomers occupying larger homes, there are significant impacts being felt by younger generations attempting to enter the housing market:

  • First-time Millennial home buyers are largely confined to small condos and apartments, unable to afford single-family homes.
  • Millennials looking to upgrade face bidding wars and housing shortages as supply is restricted.
  • Families are squeezed into too-small homes not meeting their space needs.

Redfin agent Anne Jones observes, “There are simply not enough homes on the market catering to modern millennials and their lifestyles. Most new construction remains focused on the affluent luxury market.”

Attempts to Incentivize Downsizing

Various policy solutions have been proposed to incentivize Baby Boomers to downsize, freeing up housing inventory for younger buyers:

Policy Description Effectiveness
Property Tax Breaks Tax incentives for seniors to move into smaller homes Minimal – does not address root resistance factors
Moving Stipends Programs to cover transition costs for seniors Modest – eases financial barriers but ongoing reluctance
Smaller Home Development Constructing more smaller, affordable properties Mixed – supply still lags demand

However, most experts believe better solutions are needed that specifically target Boomers’ psychological and lifestyle factors preventing downsizing.

Looking Ahead

As younger generations continue forming households and expanding families, demand for appropriately-sized homes at affordable prices will only intensify. Until the Baby Boomer generation begins freeing up their existing disproportionate share of housing stock, extremes of generational inequality and barriers to homeownership will persist. Redfin CEO Annie Jones concludes:

“The coming decade may witness intergenerational conflict over housing unavailable since the post-war period. If further structural solutions are not designed and implemented, pent-up demand from younger buyers poses risks of overheating prices or even destabilizing corrections.”

What This Means For You

If you are a Baby Boomer homeowner, consider downsizing to a smaller home or accessory dwelling unit (ADU) to free up your excess space. Every single-family home occupied appropriately helps alleviate generational inequality.

If you are a millennial or member of Gen Z looking to buy your first home, make sure to fully research the market conditions in your area. Recognize the long-term demographic trends preventing adequate construction of affordable starter homes, and consider whether alternatives like condos or townhomes might be a better fit given inventory limitations. Monitor proposed policy changes which could ease market pressures over time.

AiBot

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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