They rocked at Woodstock, marched in protest on campus, distrusted authority, and then as adults, took out mortgages and bought lots of real estate. But now, say some economists, baby boomers aren’t selling their houses as earlier generations did — they’re not downsizing fast enough as they approach and pass traditional retirement ages — and that’s contributing to inventory shortages of homes for sale as well as rising prices.
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 outsized 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 (2013), which estimated that households aged 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 either began to downsize by purchasing smaller single-family houses or they rented apartments. Boomers don’t seem to be in a rush to do either. In a report prepared this summer, Fannie Mae’s Patrick Simmons, an economics and strategic research group director, said that there’s no statistical evidence that boomers are reducing their single-family occupancy rate, trading down to homes with fewer rooms, or pushing up demand for apartments. Between 2010 and 2013, he said, “the number of boomer apartment renters did not change significantly,” but the number of millennial apartment dwellers increased by an average of nearly half a million a year.
