Forget the condo by the golf course. Instead of downsizing into smaller homes or condos, a growing number of baby boomers are holding onto large properties — or buying even bigger ones — reshaping an already tight housing market.
Boomers are now the largest group of homebuyers in the U.S., and most have a financial edge over younger buyers.
"We are seeing that baby boomers are staying put in larger homes for longer and are also making up a larger share of large four-plus-bedroom purchases," said Hannah Jones, a senior economist with Realtor.com.
Jones said the extra space isn't always about personal comfort. Multi-generational living is also driving the trend.
"More adult children are living at home for longer," Jones said. "There are all of these other forces that could also be keeping baby boomers in their home for longer."
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When you think about it, many baby boomers have likely paid off their mortgages and face high replacement costs, even if they choose to downsize.
Pressure on housing inventory for younger families (subhead)
Still, the shift is adding pressure to an already tight housing market. According to Redfin, boomers in one- or two-person households own more than a quarter, 28%, of three-bedroom-plus "large" homes in the U.S.
By comparison, millennial families with children own just 16%.
With fewer large homes available, many young families are getting priced out.
"Unfortunately, young families are being hit from both sides where there's going to be less inventory available to them. On top of that, the inventory that is available may be less approachable financially," Jones said.
For years, the housing industry predicted a "silver tsunami" — a wave of boomers selling their homes and downsizing. Jones said that wave has been more of a trickle based on individual and family circumstances.
"For right now, we do see that they tend to be staying in these homes for longer," she said.
Many empty nesters still downsize
For many baby boomers, the shift away from large family homes still makes sense.
Mary Anne Stro left her home for an apartment in a retirement community after finding herself living alone without family nearby. She said the move gave her the independence she wanted.
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"I have a washer-dryer in my apartment; I have a full kitchen. I come and go as I please. I have underground parking," Stro said.
For first-time buyers navigating the market, Jones said preparation is key: know your numbers, understand how your budget changes when mortgage rates go down, and be ready to act quickly if mortgage relief arrives.
