The Baby Boomer Effect on Real Estate

Baby BoomersAccording to a Washington Post article titled “By Not Downsizing, Baby Boomers Help Clog Up the Real Estate Pipeline, baby boomers are not moving out of their family homes as quickly as the generation before them did.  Due to the enormous size of the baby boomer generation, this is obviously affecting the supply of home for sale.  Home prices will continue to rise until the baby boomers decide to downsize.

The article goes on to say that in 2013 baby boomers (people at the age of 55 and older) owned two-thirds of the home equity in the United States.  This information was obtained from the Federal Reserve’s most recent Survey of Consumer Finances.

I had no idea Baby Boomers were such a big part of the overall real estate market, but it does make perfect sense.  There are a lot of baby boomers that have been living in their family homes for many years, and I’m sure they are reluctant to sell so soon after the housing crisis and the great recession.  Some are probably trying to build their equity back to the maximum amount possible before they sell, while others are just hoping to break even again so they don’t have to bring money to the table at closing.

The article concludes by saying that the boomers obviously can’t stay in their homes forever.  When they do start to downsize and move out of their homes, the market will balance out and prices will drop.  I think it’s important for boomers to realize this, because they will make more money selling at the onset of the downsizing movement than they will later on after prices have already started to decline.

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