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May 23, 2024

Baby Boomers Refuse to Downsize, Squeezing Millennial Homebuyers

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Jan 17, 2024

The great generational standoff over housing in America continues. As millennials reach peak home-buying age, baby boomers are staying put in their spacious single-family homes well into retirement. This mismatch between aging boomers occupying larger homes and young families struggling to find affordable starter houses is creating tensions in many local real estate markets.

Boomers Own Twice as Many Large Homes

A new study found that baby boomer couples (aged 58-76) own twice as many 3-4 bedroom homes as millennial couples (aged 26-41) with children. There are simply not enough family-sized houses available for the next generation:

Generation Share of Couples Owning 3-4 Bedroom Homes
Baby Boomers 44%
Millennials 21%

Boomers also occupy 40% more square footage on average than younger demographics trying to trade up into larger homes. With homeownership stagnating among Gen Z and only moderate gains for millennials, where are tomorrow’s families supposed to live?

Why Aren’t Boomers Downsizing?

Economists predicted that as baby boomers entered retirement, they would sell off their suburban houses and downsize into urban condos or senior communities. But remarkably few have done so. Today, 3 in 4 boomers say they have no plans to move.

There are several emotional and financial factors driving this trend:

  • Sentimental attachment – Many boomers have lived for decades in homes where they raised children and made memories. With more healthy years ahead, they want to “age in place.”
  • Aid from children – Adult children often encourage parents to stay put and offer to help with maintenance.
  • Rising equity – Long-time owners enjoy record home equity from price appreciation.
  • Lower expenses – Without mortgage payments, property taxes and utilities are affordable.
  • High moving costs – Downsizing logistics and renovating new homes seems daunting.

The Domino Effect

The tight housing supply also has a domino effect across other demographics. For example, Generation X buyers are being squeezed even more than millennials. First-time buyers make up a third of millennials but only a quarter of Gen X – indicating greater competition for starter homes among 40-55 year-olds.

With the rungs missing from the property ladder, 72% of older millennials now say homeownership is too expensive where they live. First-time millennials buyers often must resort to small condos or fixer-uppers rather than the suburban houses they desire for raising a family.

When Will Inventory Open Up?

All eyes are on when aging boomers will finally start selling in significant numbers. Economists project large numbers of suburban baby boomer homes will hit the market later this decade, primarily driven by inheritances transferring wealth to Gen X and millennials after boomer deaths.

Some analysts argue that downsizing is imminent as maintenance costs and property taxes pose greater burdens and mobility needs change. However, 64% of boomers still feel younger than their age, and with advancing medical treatments, overall life expectancy continues rising.

Urban planners warn that without a substantial increase in new housing construction, shortages will persist. In many regions it remains difficult to build denser, multi-family housing projects due to zoning restrictions and neighborhood objections. The imbalance between America’s largest-ever senior generation occupying its largest-ever houses while the succeeding generations struggle to find affordable options for buying even modest starter homes will continue to strain the social contract across communities and markets.

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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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