Rising mortgage rates and home prices plus inventory shortages are converging to create a new housing crisis for baby boomers, according to Bankrate.com (Sept. 2018.)
As the largest generation in the United States for more than five decades, Baby Boomers have driven the economy including home ownership. Realtor Magazine (July 2018) reports that Baby Boomers (born between 1946 and 1964) own two in five homes in the country. Gen X, Millennials and Centennials as they are known occupy only about 14 million homes.
In 2000, the share of baby boomer homeowners was 43.5 percent. In 2010, that number fell slightly to 42 percent, and has since stayed at 41 percent, reports Mark Fleming of Firstam.com (May 2018.)
Fannie Mae estimates that between 2016 and 2026, as many as 11.9 million older owners will end their homeownership status. Health considerations, financial limitations and death will be contributing factors. In its 2018 Survey of Home and Community Preferences, AARP found that 76% percent of Americans age 50+ prefer to remain in their current home, 77% would like to remain in their community for as long as possible, but only 59% think they’ll be able to stay in their current home (46 percent) or another address in area.
Eventually, health or other issues will force baby boomers to move. Between 2016 and 2026, as many as 11.9 million older owners will end their homeownership status, according to estimates by Fannie Mae. From 2026 to 2036, another 13.1 million to 14.6 million will move as well.
Homeownership demand by younger generations is insufficient to fill the void left by older sellers, according to Fannie Mae’s Economic Strategic Research Group (July 2018). The same Fannie study warns that younger upcoming buyers may not want homes or the lifestyle of previous generations and may not be able to qualify financially either.
Forecasters are 180 degrees apart in their predictions. Dowell Myers, a professor at the University of Southern California, is a proponent of public and private policy changes to help younger buyers finance their first home. Lawrence Yun, chief economist with the National Association of REALTORS®, believes that population growth in the U.S. and foreign-born buyers will mean there are plenty of buyers for Baby Boomers’ homes.
Contact Park Property Realty’s experts to discuss the options available to Baby Boomers.