Baby boomers are refusing to downsize in their golden years, according to a Redfin study, which found that the generation born between 1946 and 1964 owns nearly three in 10 (28.2 percent) large homes in the nation—nearly twice as many as millennial households with kids (14 percent).
This is happening despite boomers' kids having long left the nest and their households having shrunk to one or two people. Instead of selling their large properties and moving to a smaller place, boomers are turning the extra bedrooms into hobby rooms and guest rooms for visiting family members.
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While it's understandable why boomers are holding on to their mortgage-free large homes, which are likely cheaper than what a new, smaller property might cost them now, their choice to stay put is having a profound impact on the U.S. housing market, contributing to keeping inventory tight. Some 54 percent of boomers own their homes and no longer need to pay a mortgage, according to Redfin.
The historic supply shortage in the country, which is mainly because the U.S. hasn't built enough homes since the 2007-2008 crisis, has kept prices up, even when demand dipped between late summer 2022 and spring 2023, triggering a correction at the national level.
"The number of homes for sale is near historic lows and that is in part due to baby boomers holding on to their homes and aging in place," Daryl Fairweather, Redfin's chief economist, told Newsweek.
"The larger problem is that there isn't enough new construction being built to meet demand from Gen Zers and millennials or from baby boomers who would want to downsize in retirement."
Gen Zers with kids own only 0.3 percent of large homes in the U.S., according to the Redfin analysis. Some 7.5 percent of the country's large homes are owned by boomers with households of three adults or more, which includes adult children living with their boomer parents.
The market for large homes has changed drastically in the past 10 years, when, according to Redfin, young families were just as likely as empty nesters to own large homes. The study was based on an analysis of U.S. Census data from 2022 about the share of three-bedroom-plus homes owned and occupied by each generation.
The impact of baby boomers dying off in the coming decades will "somewhat alleviate the inventory crunch," Fairweather said, but it might not be enough to meet the housing demand of the younger generations.
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"Gen Z is going to want homes that are near job opportunities, close to amenities, and resilient to climate change," she said. "The current inventory of homes that baby boomers own may not meet those wants."
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Giulia Carbonaro is a Newsweek Reporter based in London, U.K. Her focus is on U.S. and European politics, global affairs ... Read more
