Boomers are part of a “clogging up [of] the whole chain of home sales,” Sean Becketti, chief economist of giant mortgage investor Freddie Mac, told me last week.
“They appear to be staying in the family home longer than previous generations,” Becketti wrote in a new outlook report, “and the imbalance between housing demand and supply continues to boost prices.”
Of course, boomers’ behavior has had outsize effects on the national economy for decades. In real estate, their footprint is enormous. Becketti cites the Federal Reserve’s most recent Survey of Consumer Finances, which estimated in 2013 that households led by people age 55 and older controlled two-thirds of all home equity. One federal estimate puts the aggregate value of their houses at close to $8 trillion.
In past generations, once the kids moved out, empty nesters began to downsize, either purchasing smaller houses or renting apartments. Boomers don’t seem to be in a rush to do either.
While bigger and more expensive housing is moving more quickly, it is at the lower end of the market – smaller and cheaper homes – that needs help. Where are the starter homes for younger adults? It could be a combination of developers focusing on homes with higher profit margins, millennials waiting longer to purchase homes, and older residents staying put longer. This not only affects different age groups; it also has an overall impact on the supply of affordable housing for anyone which is lacking in many major metropolitan regions.
So what kind of incentives would convince Baby Boomers to move?