How Boomers and Millennials Are Changing the Real Estate Market
There are plenty of differences between millennials and baby boomers. But, both generations have one thing in common: They are changing today's real estate market in big ways.
Baby boomers make up the post-World War II generation born between 1946 and 1964, while millennials were born between 1981 and 1996, according to Pew Research Center.
Here’s a look at how these two generations are changing the real estate market.
While many view renting as something done by those just starting out, a growing number of baby boomers are choosing to forgo a mortgage. This trend toward renting is not only seen in large cities, but in the suburbs as well, according to Stephanie L. Williams, president of Bozzuto Management Company. Williams told the Washington Post that mobility is a big factor in why boomers decide to rent. Their children are grown so they no longer need a large home.
“Instead, they’re opting to rent in urban environments that offer greater flexibility for travel and the option to leverage the equity in their homes,” Williams said.
Aging in Place
Not all baby boomers are opting to sell their large homes, however. Instead, many are choosing to age in place. A 2019 Chase survey shows 76 percent of baby-boomer respondents own their home and 88 percent are looking to renovate.
“Additionally, the survey confirmed that bathroom renovations are their top project,” Chase reported. “A safe and easy-to-navigate bathroom is vital to an aging homeowner, and many of these features large walk-in showers and natural lighting are today’s popular design trends.”
Waiting Longer to Buy
Today, millennials looking to buy their first homes will pay 39 percent more than baby boomers did in the 1980s, according to a study by Student Loan Hero. That’s causing many millennials to wait longer to buy homes, so they can save up for a down payment and pay off debt.
However, when millennials do buy their first home, they aren’t necessarily going with a traditional “starter home.” In fact, Bloomberg reports that Toll Brothers, the largest builder of luxury homes in the United States, said nearly a quarter of its 2017 sales were to those 35 or younger.
Willing to Work
Many millennials love to watch home improvement shows. So when it comes time to purchase their first home, they’re willing to put in some sweat equity.
“Millennial buyers are still far more aware of the work, costs and implications of a renovation than their parents would have been,” Dana Bull, an agent with Sagan Harborside Sotheby’s International Realty, told Realtor magazine. Bull added that millennials aren’t afraid of DIY projects and can look past things such as outdated wallpaper or a wall that can be easily removed.
Downsizing is a word that comes up when describing the baby boomer housing market and the millennial housing market. As many boomers look to sell their large homes and opt for something more manageable, many millennials are saying, “No thanks,” to these larger, sprawling homes.
According to the Wall Street Journal, “Tastes and access to credit have shifted dramatically since the early 2000s. These days, buyers of all ages eschew the large, ornate houses built in those years in favor of smaller, more modern-looking alternatives, and prefer walkable areas to living miles from retail.”
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