5 months ago
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As baby boomers increasingly seek to age in place in their own homes — a scenario supported by both the preferences of older homeowners and the realities brought on by elevated mortgage rates — this is clashing with the desires of millennials who wish to enter the housing market, as the combination of limited inventory and high costs are keeping these buyers on the sidelines of the mortgage market.
This is according to a recent column published by Fortune, which examined the dynamics that could contribute to boomers staying in their homes longer while many millennials are challenged to enter the housing market in the first place.
Data shared with the outlet indicated that baby boomers make up roughly one-third of all U.S. homeowners. They have added incentive to stay where they are — particularly if they have a low, pre-2022 mortgage rate or their home is paid off, the column stated.
“[I]n our current environment, where mortgage rates skyrocketed from historic lows throughout the pandemic to a more than two-decade high in October last year, being mortgage-free is like hitting the mother lode,” the column read. “It’s partly why boomers aren’t moving — because why give up no mortgage rate, or a substantially lower one, for one that’s in the 7% range plus a higher monthly payment?”
Other factors are keeping millennials on the sidelines. The salary needed to buy a starter home, for instance, has nearly doubled since the start of 2019, according to data from Redfin. Meanwhile, inventory levels remain at historic lows that contribute to a severe lack of affordability across the country.
On top of this, baby boomers are holding onto their larger homes that feature three bedrooms or more, according to data published by Redfin in January.
While these factors combine to incentivize baby boomers to remain where they are, older Americans also may be making the choice to age in place based on comparisons with other options, such as dedicated long-term care or senior housing facilities. By and large, seniors are opting to remain in their homes — and even to undertake significant renovations to them — to avoid moving to such facilities, according to recent reporting from The Associated Press.
But not all boomers and millennials are locked into this dynamic. Recent data from the National Association of Realtors (NAR) also showed that millennials recently surpassed baby boomers as the largest homebuying demographic.
“The generational tug-of-war between millennials and baby boomers continued this year, with millennials rebounding to capture the largest share of home buyers,” Jessica Lautz, NAR’s deputy chief economist and vice president of research, said in the report.
“This notable rise is attributed to both younger millennials stepping into homeownership for the first time and older millennials transitioning to larger homes that suit their evolving needs,” she added.
English (US) ·