For years, many parents put their family homes up for sale once the kids grew up and moved out— this is known as the “empty nest” story, where many parents wanted to downsize as they grew older and neared retirement. This isn’t the case anymore— many Baby Boomers (born between 1946 and 1964) haven’t been able to find a smaller home that was cheaper than the large family home, so instead they’re opting to stay put and not sell. With so many Boomers choosing not to list their homes for sale, overall inventory has remained tight and prices have stayed high.
Why is this?
In a recent survey conducted by Realtor.com, 85% of Baby Boomers said they were not planning on selling their homes in the next year. When asked why, 72% said that their current home met their family’s needs, 13% said financial concerns prevented them from selling, and 12% said they needed to make home improvements before selling. Baby Boomers hold a very high stake in the housing market, as they currently make up 78% of ALL homeowners, while Millennials only make up 41%.
As Baby Boomers decide to stay put, this removes about 33 million properties from the housing market. Many of these homes are suburban single-family homes or urban condos— the same types of homes that Millennials are looking to buy. However, many of these older homes do not have the same modern, open-floor plan that both Millennials and Baby Boomers alike are attracted to, making it difficult for Baby Boomers to sell their homes. Both generations are competing for the same types of homes (1,800-1,950 sq. ft.), even though they have different lifestyles.
Many low-end homes that Millennials would consider purchasing in a more balanced market are being rented rather than being available for sale, due to competition being so high. The idea of purchasing a starter home and reselling it several years down the right road when they’re ready to settle down and start a family is no longer a viable option for them, due to lack of inventory and affordability in today’s market. As a result, many Millennials are now skipping traditional starter homes, and choosing to buy something larger right off the bat.
Many analysts believe that more housing in the future should be built to cater to the desires of Millennials (greener materials, less square footage, etc.) rather than the older generations. Others believe that Baby Boomers will eventually sell their homes as they hope to get a better price later rather than settling for a lower price now. If and when “the great senior sell-off” happens, it isn’t likely until the mid-to-late 2020s, as the oldest millennials approach their mid-40s and are more interested in the larger homes that the preceding generation is ready to let go of.