Some economists say the baby boomers aren’t selling their homes like previous generations did and not downsizing fast enough – and that leads to shortages of homes for sale and rising prices.
Baby boomers are “clogging up the whole chain of home sales,” says Sean Becketti, chief economist of Freddie Mac. “They appear to be staying in the family home longer than previous generations, and the imbalance between housing demand and supply continues to boost prices.”
Baby boomers are big players in real estate. In 2013, people age 55 and older controlled two-thirds of all home equity, according to the Federal Reserve’s most recent Survey of Consumer Finances.
In previous generations, once the kids moved out of the house, empty nesters tended to downsize and move to smaller homes or rent apartments. But so far, boomers haven’t made a move.
“Economists say boomers’ slower-than-expected rate of downsizing and selling is playing a contributing role in supply, demand and pricing imbalances in local housing markets – not creating those imbalances,” The Washington Post reports.
Lawrence Yun, chief economist for the National Association of Realtors®, told The Washington Post that the lingering effects of the housing market crisis and the Great Recession may be the reason more baby boomers are postponing their moves. From 2008 to 2011, homeowners of all ages lost lots of equity, and many of them may still be rebuilding equity to allow them to sell without having to bring money to closing.
But Fannie Mae’s Patrick Simmons, an economics and strategic research group director, says that the real estate pipeline clog caused by baby boomers probably won’t last much longer.
“Boomers will not inhabit this vast inventory [32 million homes] forever,” he says. Their circumstances will inevitably change with age and they will move, and “their actions will reverberate through the housing market.”
Thinking about downsizing into a smaller home, maybe a 55 plus community, renting, or just purchasing a smaller home. Click here to view some communities that you may be interested in.
Source: floridarealtors.org