Baby Boomers are Reluctant to Sell
Boomers own 38% of American Real estate but more than half (54%) never plan to sell their homes, according to a study by Clever Real Estate.
Boomers, now between 60 and 78 years of age account for only 21& of the U.S. population, yet they own 38% of the nation’s homes (as mentioned above) according to Freddie Mac data.
Their disproportionate hold over the housing market is understandable since homeownership rates tend to rise with age, up to a certain point. Historically, those rates begin to decline at age 75 as homeowners begin downsizing, with many eventually moving in with family or to assisted-living facilities.
Interestingly, most boomers today are showing no interest in downsizing as they age.
Boomers believe that if they did sell, they would profit over $100,000, while 40% expect to clear $200,000. When asked, three quarters of Boomers explained that not selling before they die is the primary reason they are financially secure.
When we consider this in terms of the larger real estate market, Boomers’ reluctance to sell their homes helped cause the shortage of home for sale on the market, sending home prices to record highs.
The supply of homes for sale at the end of July was 1.33 million units, which equals a four-month supply at the current sales pace, according to the National Association of Realtors. Although that’s up 20% from a year ago, it remains well below the six-month supply that economists say represents a balanced market.
Half of boomers who have owned a home said they had bought their first one for $75,000 or less, and almost two-thirds (64%) paid less than $100,000, the survey found. And only 6% of boomer homeowners said when buying their first place that homes were too expensive.
While those figures don’t account for inflation and rising wages, they paint a picture of a generation that faced fewer hurdles to homeownership than young buyers do today, as high home prices, elevated mortgage rates, and limited supply all combine to make conditions difficult for first-time buyers.
Only 19% of Baby Boomers think they could have afforded a home in a market like todays, yet 71% believe younger generations could if they didn't spend frivolously.