Baby Boomers have been a big deal ever since they arrived from about 1946 to 1964. When people returned from WWII, the economy was booming; there were plenty of jobs, and people could easily afford to start families. They produced one of the largest generations in history. Because of the size of their cohort, Boomers have always had an outsized influence in pop culture, politics, and the economy.
Today, Baby Boomers are entering or approaching retirement. This change of life will have a significant impact on many areas of the economy, again because of the size of the group. As boomers age, they’re having a real effect on the real estate space. Millennials are facing an unaffordable housing market in part because Baby Boomers have decided to stay in their single-family homes longer than prior generations.
Millennials are an even larger cohort than Baby Boomers. However, they haven’t had the same level of impact on society. Millennials, born between 1981 and 1997, have experienced a recession, an economy that’s contracting in many sectors and a substantially increased cost of living. Because of this, millennials haven’t been able to get on the property ladder in the same way that their parents were able to.
Traditionally, people buy houses in part so that they have an asset that can be sold when they reach retirement age. Downsizing by selling the home saves them time and effort on maintenance. The proceeds from selling the house make it possible for them to live comfortably, in a more affordable space where they aren’t responsible for upkeep. Part of their retirement savings, in effect, is in the home. As Baby Boomers buck this trend, it’s causing real strain for the generation that comes behind them.
The good news is that this will come to an end eventually. One issue among Boomers is that they’re staying in the workforce longer than prior generations. They’re reluctant to leave their homes before leaving employment. However, real estate analysts expect that a big shift is coming. Whether the Boomers leave their single-family homes late in life or opt to die in place, they can’t stay there forever. So a market correction is coming. The only worry is that it will be too late to help millennials.