By Not Downsizing, Baby Boomers Help Clog Up The Real Estate Pipeline
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, some economists say, 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 shortages of homes for sale as well as to 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 outsize 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, which estimated in 2013 that households led by people age 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 began to downsize, either purchasing smaller houses or renting apartments. Boomers don’t seem to be in a rush to do either.