Just when you think they’re too old to influence the smart, better-educated and computer-savvy younger generations, they raise their grey and balding heads again to remind their kids and grandkids they are still alive and influential.
For years, the prediction would be that boomers would start to sell off their big houses, flooding the market with properties. Instead, just the opposite is happening. Many aren’t even considering selling their large family homes, and for good reason.
Boomers own half of all of the $32 trillion in home equity in the country, according to a Redfin analysis of Federal Reserve data. In addition, nearly 80% of boomers own their primary residence and about a quarter own an investment property. More than half of them have retirement accounts with a median balance of $191,200, as well as 27% owning stocks and bonds outside of retirement accounts with a median amount of $201,800. These statistics come from a data scientist for the St. Louis Fed who researches wealth.
And it gets better. Not selling their properties has helped boomers accumulate a level of wealth greater than any other living generation. The median prices of existing single-family homes have increased more than tenfold since the early 1970s, when the oldest boomers were buying their first homes.
Even though boomers have a big financial incentive to stay in their homes with either no mortgage or very low-rate mortgages, some are moving on. Boomers made up 31% of home buyers, while millennials made up 38% in 2023, as reported by the National Association of Realtors. They frequently buy with cash, avoiding the higher interest rates in today’s market.
The boomers have had a major influence on the current real estate market. Mortgage rates topped 7% after the Federal Reserve’s last meeting when they held rates at their current level. That has pushed up the yield on 10-year treasuries, which mortgage rates tend to track. They also didn’t give any indication of lowering the rate any time soon based on the level of inflation, however, many economists still expect rates to decline later this year.
Even though new properties have been listed, there is a continuing low supply of homes for sale nationally. This continues to push prices higher with the national median existing-home price going up 4.8% in March from a year earlier to $393,500, as reported by the National Association of Realtors. The Manatee County median sale price for March by comparison was $498,805, 1.4% higher than last year.
Homebuyers are also confused about coming changes to the rules governing how real estate agents get paid and how this will affect their overall costs. And let’s not forget it’s a presidential election year, as well as one with several worldwide military conflicts bubbling up. All this influences home shoppers and sellers to perhaps pause until there is more clarity and less stress in the market.
The lack of boomer activity is, to a large degree, another byproduct of COVID-19, the pandemic that keeps on giving. As bad as COVID-19 was, it has worked to the advantage of boomers, increasing their equity tremendously and allowing them to refinance existing mortgages to a historic low rate.
The baby boomer generation has influenced everything that has gone on in this country since 1946, when the oldest of them were born, and they’re not going away. Whether it’s housing or the price of milk, boomers continue leaving their mark.
