Ten thousand boomers retire today. At some point that massive amount of humanity growing old is going to impact real estate, and as they early boomers reach 65-75, they’re starting to look at options.
The concern is that over the next decade they’re going to start unloading their homes, and there aren’t enough younger buyers to buy all those properties, depressing the market and lowering home values.
Boomers own two out of every five homes in America.
Alex Doubet is CEO of Door, a real estate firm that handles all aspects of home purchases. He says interest rates, which have been ticking upward, will shape how millennials handle home-buying. “When you have debt-ladened millennials looking to buy a home those interest rate swings make a massive difference in what house they can afford.” He older downsizers are the biggest share of people selling homes, and millennials are the biggest buying population. Boomers have a lock-in because their equity has increased up to 70% over the past decade, and they’re holding on to mortgage-free housing supply. He says as Boomers get older and their lifestyle changes they’ll free up inventory, but many of those homes are large, and millennials are looking for smaller homes with lower maintenance costs. There may be extra inventory on the market for whom there aren’t many buyers.
Houston Association of Realtors Chair Shannon Cobb Evans says she’s also seeing a movement towards second homes in Hill Country or along the coast, or downsizing, which she calls right-sizing. “The clients I’ve been working with are also looking at high-rises where they can lock and leave.”
Morgan Stanley suggests within a decade there could be more renters than homeowners.