It’s been common knowledge since mid-2020 that Millennials were the big reason the nation’s housing market has been going haywire. But new research from Zillow suggests the blame should get spread around to include Baby Boomers.
Going into 2020, the median age of a buyer was 44 in 2019, up from 40 in 2009, Zillow found. The share of Baby Boomers in the market grew 47 percent from 2009 to 2019 while the share of recent buyers between ages 18 and 39 fell 13 percent, Zillow said.
Combined with dramatic under-building, this increased share of older buyers in the marketplace – who typically have much more savings built up over their lifetimes, as well as equity from a previous home sale – helped power the dramatic price increases seen over the last 18 months. With more money available, Boomer buyers were likely able to make more all-cash offers during bidding wars, even as all buyers were benefitting from record-low mortgage interest rates that allowed them to afford to pay significantly more than in previous years and enabled more buyers to enter the market’s lower end, who were previously shut out of it.
“Even before the pandemic, the largest-ever generation entering their 30s and the hangover from more than a decade of underbuilding were on a collision course set to define the U.S. housing market,” Jeff Tucker, a senior economist at Zillow, said in a statement accompanying the research. “The pandemic supercharged demand for housing, bringing the shortage into relief sooner than we expected, as millennials sought bigger homes with Zoom rooms, and older Americans accelerated retirement plans, spurring moving decisions.”
Across the country, Zillow found cheaper metros saw higher rates of Millennial homebuying, like Buffalo and Salt Lake City, with the exception of San Jose, California, in the heart of Silicon Valley. Zillow researchers speculated that the region’s high median income was likely the cause.
“There are many hurdles millennials must overcome when buying homes of their own, one of them being fierce competition from the next-most-populous generation: baby boomers,” Tucker said. “Whether downsizing or moving to a new town, baby boomers being more active means competition that previous generations did not have when buying their first home. And older buyers have the advantage of a lifetime’s worth of savings and home equity to leverage in a competitive offer.”
The report comes as the Greater Hartford Association of Realtors reports that inventory continues to stay low, as does pending sales, possibly thanks to price increases pushing some out of the market.
Year over year, new listings decreased 3.1 percent (from 6,986 through Sept. 31, 2020 to 6,769 through Sept. 31, 2021). The average days spent on market decreased 43.3 percent (from 53 to 30 days) over the same time frame. Pending sales dropped comparing September 2020 to September 2021, from 708 to 660, GHAR reported.
“The drop in sales could be due to potential buyers waiting for prices to ease,” GHAR CEO Holly Callanan said in a statement.
