As baby boomers increasingly seek to age in their own homes—a scenario supported by the preferences of older homeowners and the realities of rising mortgage rates—this is paralleled by the growth of millennials looking to enter the housing market. Conflicting desires have kept these buyers on the sidelines in the mortgage market due to limited inventory and high costs.
This is based on a recently published column wealthwhich examines the dynamics that may help baby boomers stay in their homes longer while many millennials face challenges entering the housing market in the first place.
Baby boomers make up about a third of all homeowners in the U.S., according to data shared with the outlet. The column noted that they have more incentive to stay put — especially if their mortgage rates are lower, before 2022 or if their homes are paid off.
“[I]In our current environment, where mortgage rates have soared from historic lows throughout the pandemic to more than two-decade highs last October, mortgage-free lending is like hitting the mother lode,” the column reads. “That’s part of the reason why baby boomers aren’t moving — because why not give up mortgage rates, or give up significantly lower mortgage rates, and go for mortgage rates around 7 percent, plus higher monthly payments?”
Other factors are also keeping Millennials on the sidelines. For example, the salary needed to buy a starter home has nearly doubled since the start of 2019, according to data. redfin tuna. At the same time, inventory levels remain at historically low levels, leading to a severe lack of affordability across the country.
Beyond that, baby boomers are retaining larger homes with three or more bedrooms, according to data released by Redfin in January.
While these factors combine to motivate baby boomers to stay put, older Americans may also choose to age in place based on comparison to other options, such as specialized long-term care or senior housing facilities. According to recent reports, in general, older adults are choosing to stay in their homes or even make major renovations to their homes to avoid moving to such facilities. Associated Press.
But not all baby boomers and millennials are caught in this dynamic. The latest data comes from national association of realtors (NAR) also shows that Millennials recently surpassed Baby Boomers as the largest group of home buyers.
“This year, the intergenerational tug-of-war between Millennials and Baby Boomers continues, with Millennials rebounding to make up the largest share of homebuyers,” Jessica Lautz, NAR deputy chief economist and vice president of research, said in the report. share.
“This significant growth is attributed to younger Millennials becoming homeowners for the first time and older Millennials transitioning to larger homes that fit their changing needs,” she added.
