Here on Luxury LA Homes we’ve written at length about the short and long term outlook of the housing market. Just last week we did a deep dive into nationwide inventory shortages and what that’s doing to median home prices. Two other large real estate market forces are generational. Millennials and Boomers are both affecting housing in different ways.
Millennials are delaying the home buying decision until later and later in life. Many surveyed Millennials actually say they’re fine with renting. We’ll have to wait and see if home ownership numbers actually dip as more and more Millennials get married and start families. In the past that has coincided with a move to the suburbs for more space and better schools.
Conversely, Boomers are staying in their homes much longer than in the past, which is pushing expected housing inventory numbers down. Let’s look at some numbers compiled by the California Association of Realtors and the AoA (Administration of Aging).
32 percent of the U.S. population is 50 years or older, inversely, two-thirds of the primary home equity is owned by those over 55. The choices made by this demographic group will impact housing opportunities available to younger generations, especially millennials.
- Only 19% of homeowners under 55 own their homes outright and have no mortgage.
- 52% of those 55+ own their homes outright.
- 59% do not plan on selling their home after retirement.
- 47% plan to downsize after retirement.
- 44% plan to move out of state after retirement.
It’s clear that the majority of home equity across the country is controlled by Boomers. That’s not entirely unexpected considering the average mortgage is now 30 years in length vs. 15 years. What’s interesting and potentially impactful to the market as a whole, is that more Boomers plan on staying put post retirement verses selling their home and downsizing.
Researchers and experts aren’t able to yet pinpoint why that is, but anecdotally many Boomers (including many from the 47% who say they plan on downsizing) are finding that moving just doesn’t make sense. Housing prices in urban cores and other highly walk-able (aka desirable) areas are disproportionately expensive and that doesn’t account for additional HOAs most condominium owners face . Many Boomers haven’t been able to embrace their dream of downsizing.
For all of your Los Angeles area home buying and selling needs, please contact us now at 323-829-8811 or email Susan Andrews at susan@luxurylahomes.com.
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