Baby boomers are choosing to stay in their large homes even after their children have left, according to a study by Redfin. This decision is impacting the U.S. housing market, as nearly three in 10 large homes in the nation are owned by baby boomers. Despite the decreased household size, boomers are keeping their homes and utilizing extra space for hobbies and guest rooms. This trend is contributing to a lack of inventory in the housing market, with 54 percent of boomers owning their homes mortgage-free.
The housing market in the U.S. is experiencing a historic shortage of supply, in part due to the lack of new construction after the 2007-2008 crisis. Prices have remained high even as demand has fluctuated, due to the limited availability of homes for sale. Baby boomers aging in place are a contributing factor to the shortage, as they are not downsizing as expected. Gen Zers with kids own only a small percentage of large homes, while a significant portion of large homes are owned by boomers with households of three adults or more, including adult children living with their parents.
The landscape of the market for large homes has shifted in the past decade, with young families and empty nesters no longer owning large homes at similar rates. While the eventual passing of baby boomers may alleviate some of the inventory crunch, it may not be enough to meet the housing demands of younger generations. Gen Zers are seeking homes near job opportunities, amenities, and resilient to climate change, which may not align with the current inventory of homes owned by baby boomers.
The impacts of baby boomers staying in their large homes are being felt across the housing market, with limited inventory affecting pricing and availability. Redfin’s chief economist, Daryl Fairweather, emphasizes the need for more new construction to meet the demands of younger generations and aging baby boomers looking to downsize in retirement. Changes in the market for large homes are expected in the coming decades as baby boomers pass away, but it may not fully address the housing needs of future generations.
As baby boomers hold onto their homes, the housing market continues to face challenges in meeting the demands of younger generations and maintaining adequate inventory. The impact of baby boomers staying in their large homes extends beyond individual choices, influencing pricing, availability, and the overall dynamics of the real estate market. Redfin’s analysis highlights the need for increased construction to address the needs of both older and younger generations in the changing landscape of the U.S. housing market.
