By the 2030s, about 20 percent of the United States population will be retirement-aged, according to American Land Title Association. By 2035, it’s estimated there will be over 78 million Baby Boomers–those born post-World War II between 1946 and 1964–as compared with only 76 million young people under the age of 18.
For the first time ever, Boomers are projected to outnumber younger generations. What does an aging older generation and a smaller younger one mean for the future housing market?
It’s hard to predict what the housing market will look like decades from now, let alone in 10 years. Monarch Title has turned to national housing experts to decide what aging Baby Boomers could mean for the housing market in the next decade or so.
A staggering 80 percent of Baby Boomers own homes. Boomers are holding on to their larger family homes despite empty nests. According to a Stephen S. Fuller Institute at George Mason University study, over 270,000 Boomers own homes with at least two bedrooms more than the number of people living in the home. Most Boomers aren’t selling, downsizing or renting homes and apartments that fit their families. Instead, Boomers are staying put in their homes.
Two in every three Boomers are reportedly “aging in place,” meaning they want to retire and live the rest of their lives in their current larger-family homes. Most are turning to renovations to modify and modernize their living spaces to fit their current needs. Boomers are upgrading their homes to include wider windows and hallways that are wheelchair-accessible and even installing wheelchair ramps, according to the City Lab.
To offset Boomers remaining in their homes, more houses will be built for younger families to prevent a housing shortage. This won’t necessarily solve any impending housing crisis, as these new-builds likely won’t be what buyers want.
Because Boomers are staying put, developers are likely to create similar homes to what are already out there. Younger generations are less likely to purchase Boomers’ homes and similar new builds. Homes with excessive space, compartmentalized designs and outdated technology, such as landlines, are not appealing.
Boomers and Generation Xers mostly live in multi-level detached homes in classic suburbia while younger generations, who are delaying marriage and starting families later, seek urban condos and down-sized townhouses.
But Millennials and Generation Z want move-in ready smaller homes with open-concepts. They are looking toward green, sustainable living, in-law suites and fewer square footage, according to City Lab.
Through the 2020s and 2030s, Baby Boomers will be moving into nursing homes and putting their properties on the market by the millions. In a study done by Fannie Mae’s Economic and Strategic Research group, between 2016 and 2026, over 10 million owners will end ownerships of their homes. Between 2026 and 2036, over 13 million will.
As mentioned above, current remodeling won’t be enough to get younger generations to purchase these homes. Even with these homes available, Millennials and Generation Z still might not purchase them. They just won’t have the financial security, after accumulating over $1 trillion in student debt and surviving off a flat job market, or desire to buy Boomers’ homes.
For Boomers ready to retire, this might seem scary knowing they won’t be able to sell their homes for adequate pricings. They will have to come down on price and forfeit their extensive retirement funds.
This doesn’t mean there isn’t hope for the coming generations and a healthy housing market. For one thing, interest rates have been steadily decreasing for the past 30 years. University of Southern California professor Dowell Myers proposes a solution to the Boomer sell-off in a Washington Post article. He suggests society as a whole should create incentivizing finance programs for younger generations now. They will be able to build enough equity to buy Boomer’s homes within the next couple decades.
Monarch Title is always here to help with a variety of title and closing services no matter the phase of life in which you might be. If you’re a Boomer trying to sell your home, or a millennial looking to buy your first family home, give us a call. We have five locations across mid-Missouri for your convenience.