Baby Boomers love their big houses. That's making life harder for their grown-up Millennial kids.
See here: Empty-nest Boomers own 28% of large homes in the US, while Milliennials with kids own just 14%, according to a Redfin analysis released Tuesday. Gen Z families own just 0.3% of homes with three bedrooms or more, my colleague Anna Bahney writes.
Millennials make up roughly 28% of the country's adult population, the largest share of any generation. But Millennial parents own half as many large homes as empty nesters.
This is a relatively new phenomenon. Ten years ago, young families were just as likely as empty-nesters to own large homes.
There are few reasons why this is going on.
- Few homeowners, regardless of age, want to sell right now. More than 90% of current homeowners with mortgages have rates at or below 6%, according to ICE Mortgage Technology. Starting a new mortgage now would mean taking on a higher rate — the current fixed-rate average is at 6.6%.
- Low inventory is keeping prices high. Even if Boomers did want to sell, their homes have become prohibitively expensive for many Millennials, said Sheharyar Bokhari, senior economist at Redfin. "These are larger homes where there are only one or two people living there and, typically, they bought it a while ago, so it has value."
But the rate lock-in is only part of the story.
"Half of these Baby Boomers own their home outright, so the rate lock-in doesn't even apply to them," Bokhari says. "They just aren't downsizing ... They love their big house."
For those who own their home outright, the typical monthly outlay for insurance and property taxes, among other costs, is just over $600, according to the report.
Boomers love a big house even more than the Silent Generation (born between 1928 and 1945).
A decade ago, Silent Gen empty nesters occupied 16% of homes that were three-bedrooms or larger — less than the 19% claimed by young families at the time.
But even then, empty nest Baby Boomers had the largest slice of large homes. In 2012, empty-nest boomers, who were then between 48 and 66, owned and occupied 26% of large homes.
There's a small silver lining for Millennials in 2024: Homes should become more affordable as mortgage rates trend down and make selling more palatable, Anna explains.
But homebuyers waiting for a so-called silver tsunami of older homeowners selling their homes en masse should not hold their breath, said Bokhari.
"Some Boomers are ready to downsize into a condo or move somewhere new for retirement, and the mortgage-rate lock-in effect is starting to ease," he said. But "there won't be a flood of inventory. There will be a trickle."
Comments
Post a Comment