Older Homeowners Are Staying Put, Freezing Out Young Families

Baby Boomers have figured out another way to torture millennials: instead of moving into smaller homes in their September years, as every generation does, they’re enjoying their big homes and they’re not going anywhere.

Amid high interest rates, expensive prices, and low inventory, empty-nest Boomers have been reluctant to sell their larger houses, which is making it hard for younger families to find starter homes, according to a report from real estate data firm Redfin.  

I’m Not Leaving

It’s no secret that the US housing market is in turbulent times. 

The average rate for a 30-year mortgage, the most common type of home loan, is hovering around 6.6%, according to Freddie Mac — down from nearly 8% last October but still higher than where rates have been for most of the last 15 years. Median prices for single-family homes rose 2.2% year-over-year to $406,900 in the third quarter of 2023, the National Association of Realtors reported. And right now, there are only about 1.5 million homes on the market, a 7% dip from the same time last year.

You can’t blame Boomers for staying put. Okay, blame them all you want, but they’re not downsizing to a smaller home or condo:

• Empty-nest Boomers own 28% of large homes (3 or more bedrooms), while millennials with kids own just 14% of them, Redfin reported. Gen Z families are barely a data point, owning just 0.3% of homes with three bedrooms or more. Millennial families are having trouble affording large homes in expensive coastal markets, but have found better luck in Midwestern cities. 
• Beyond financial incentives, Redfin’s Sheharyar Bokhari told CNN boomers have no desire to put down stakes elsewhere. “They love their big homes,” he said.

Mom and Dad’s Money: When and exactly how quickly housing inventory in the US will stabilize is up for debate. While some see an impending “silver tsunami” — Boomers selling (or dying) on a massive scale — others, like Bokhari, expect more of a trickle.  

Even in death, Boomers will make waves in housing. Douglas Elliman real estate agent Finley Behringer, who works in the mostly second-home/vacation market of New York’s Hamptons, told The Daily Upside that inheritance is one of the big discussions in housing right now. “Millennials are about to inherit trillions of dollars over the next 20 years,” he said. “You’re already starting to see this ‘unreachable Hamptons’ suddenly in reach for many people. I’ve shown a $4.6 million listing three times this week.”