Baby Boomers and the Single-Family Market

One of the most important keys in today’s single-family housing market is the baby boomer. They were born well before the first episode of Star Trek was released in the 60’s. Baby Boomers, age 55 and older own almost two-thirds of the country’s equity, which is about $8 trillion. Their numbers are roughly 67 million homeowners ages 55 and older.

It really doesn’t matter if they stay where they are or move before their time comes, their collective impact of their decisions on mortgage demand, housing options available to millennials, affordable housing supplies, and other future homeowners will be quite significant.

A Freddie Mac survey 55+ was released recently to help better understand these opportunities and challenges. About 5,000 applicants of all sexes and races born before 1961 were surveyed. They were asked about their current housing situation, their plans, and if they plan on helping their children become homeowners if they already aren’t.

The American Dream isn’t dead

A majority of surveyors said they are very satisfied with their current homes, communities, and overall quality of life. Almost 90 percent said people their age should own a home.

Homeownership is part of a healthy retirement

76 percent of the surveyors said they trust they will have a comfortable retirement. Race was of no factor in this question, despite many of which were still working. 44 percent of those still have a mortgage.

 It makes sense to own a home

An overwhelming majority said homeowner ship makes perfect sense financial stability, especially for married couples with, and without children. Slightly less claimed it made sense for single people to own a home. A quarter of the surveyors said they have given help for a down payment to a friend or relative.

63% said they want to stay where they are

The numbers behind the statistics say that 42 million homeowners are content staying in their homes for the rest of their days. Almost a quarter say they would need some heavy renovations to keep their homes accessible and a third would have to finance the renovations.

27 million would like to move once more

Movers hold the minority, but a decently sized minority. This is roughly 40 percent of homeowners would like to move one more time if they had the opportunity. This doesn’t necessarily mean downsizing to a rental or nursing home, but just a less expensive home.

These are pretty big numbers with the potential to stiffen home buying competition in the market. The generation they will be competing most with is millennials, and other first-time home buyers. This is also leading a new demand for mortgage credit.

It’s still a modest increase in lending to baby boomer homeowners, whether they plan on staying in place or moving and could add trillions of dollars in new originations in a short period of time.

No matter if we like it or not, Baby Boomer real estate decisions will take our market to new places we have never seen. 

Post a Comment