Aging Americans: The Impact on Real Estate

Baby Boomers are aging. Some are turning 70, an age when prior generations traditionally downsized, moved closer to children, or left the housing market in favor of senior living facilities, or rentals free of maintenance chores – in each case, leaving a steady housing supply for the next generation.

But the Boomer generation, which has dominated the U.S. economy for more than a quarter-century, is healthier, more prosperous, and less inclined to behave as their parents did.

The concept of aging in place, which was growing in popularity before the COVID-19 pandemic, is increasingly popular among Boomers today, some of whom are understandably wary of nursing homes, condos, and other densely-populated environments.

In fact, despite the cost of necessary retrofitting, a recent Freddie Mac study estimates that some 1.6 million more senior households are staying in their homes than did previous generations. The trend is intensifying inventory shortages and price increases, and frustrating some younger buyers who are ready to begin their own journey to real estate wealth.

Where does that leave the next generations in line for homeownership? Millennials must now navigate a constricted market.

For Gen Xers, those born between 1965 and 1980, the homeownership rate is increasing, but slowly. In 2011, they held 21 percent of real estate wealth while the Boomer’s share was 49 percent, according to NAR’s ’21 Home Buyers and Sellers Generational Trends Report. Since then, the Gen-X share has risen to 31 percent while the Boomer share has declined to 44 percent, still leaving a wide gap.

Additionally, many younger buyers prefer open living spacesover Boomer houses, which tend to be expensive, suburban, and dated.

As some economists point out, the combination of Boomers staying in place until much later and lukewarm interest by younger buyers could make for a glut of Boomer houses on the market 10 or 20 years from now when their current owners vacate.

No one knows exactly how the scenario will play out. However, among the proposed policy solutions being floated now is a program whereby the federal government would buy back some of these unsellable homes and/or design financial options to make them more attractive to younger buyers.