Baby boomers dominanting the housing market
Like pretty much everything else the price of housing shot up during the pandemic fueled by record low mortgage rates and a mass migration as Americans rethought their living situation. To add insult to injury, to tackle rising inflation the Federal Reserve began aggressively raising interest rates which helped more than double the cost of borrowing to buy a home. When coupled with high prices many would-be homebuyers were pushed out of the market.
While the bidding wars have calmed down and mortgage rates begin to retreat, another dynamic is now playing out, an intergenerational battle to buy a home. Baby boomers have become the largest group of homebuyers at the expense of millennials according to the National Association of Realtors (NAR). Over the past year the percentage of millennials who managed to close a purchase of a home plummeted from 43% to 28%, meanwhile baby boomers jumped from 29% to 39% in the same time. What’s happening?
“Boomers have the money, and they have the housing equity, and they were able to win out on multiple-bid situations by either paying all cash or putting down a significant down payment,” said the NAR vice president of research Jessica Lautz. “They’re not downsizing. Baby boomers are purchasing the same size of home or larger than what they were living in before.”
First-time homebuyers are also being squeezed out with the level at its lowest level since the NAR began measuring in 1981, dropping from 34% to just 26% over the past year.