Are Boomers In The Way?

Ken Harney, one of my favorite real estate writers, wrote an intriguing column last week asking whether Baby Boomers are getting in the way of a prosperous real estate market. Harney starts the column with this paragraph:

“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, say some economists, 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 inventory shortages of homes for sale as well as rising prices.”

There are so many factors at play in the residential real estate market that I hesitate lay blame at any particular group’s feet. (Full disclosure here: Mary and I are smack dab in the middle of the demographic, and still in our home). Sure, Boomers are staying in their homes longer, but there are many reasons: 

·         Some are waiting for their individual markets to improve so they can realize the promise of using equity from their homes in their retirement years.

·         Some are frustrated because the housing market where they want to live doesn’t have enough inventory of available, affordable homes to move into.

·         Some just like living where they live.

Movement at the “more mature” end of the housing demographic is intertwined with all other elements of the residential market. If couples that have raised their families stay put, then younger families have a hard time finding homes to raise their families in. As a result, Millennials have a harder time finding their first home. On the other hand, if Boomer couples leave their family homes, they are often competing with Millennials for smaller single family home and condos. And the loop goes round and round.

But changes are coming, Harney asserts. He quotes Fannie Mae's Simmons: “Boomers will not inhabit this vast inventory (32 million homes) forever,” and when their circumstances change — which they inevitably will with age — watch out. “Their actions will reverberate through the housing market.”

What do you think?