Article Post

Baby Boomers have devised a distinctive approach to confront millennials: instead of downsizing to smaller homes in their later years, a pattern observed in previous generations, they are choosing to remain in their larger homes. Amidst heightened interest rates, escalating prices, and constrained housing availability, empty-nest Boomers are hesitant to sell their expansive houses, posing challenges for younger families in search of starter homes, according to a report from real estate data firm Redfin.

The tumultuous state of the US housing market is widely acknowledged. The average rate for a 30-year mortgage, the most prevalent home loan type, stands at approximately 6.6%, as reported by Freddie Mac—down from nearly 8% last October but still surpassing rates over most of the last 15 years. Median prices for single-family homes experienced a 2.2% year-over-year increase to $406,900 in the third quarter of 2023, according to the National Association of Realtors. Currently, there are only about 1.5 million homes on the market, marking a 7% decline from the same period last year.

The rationale behind Boomers choosing to stay in their homes is understandable. Feel free to place blame if you wish, but the reality is—they are not opting for downsizing.

Empty-nest Boomers own 28% of large homes (with 3 or more bedrooms), while millennials with kids own only 14% of such homes. Gen Z families barely register, owning a mere 0.3% of homes with three bedrooms or more.
   
Inheritance Impact: The timing and pace at which the housing inventory in the US will stabilize remains a topic of debate. While some envision an impending "silver tsunami" involving a massive scale of Boomers selling (or passing away), other real estate professionals foresee a more gradual process.