Boomers are setting up a showdown with millennials, aging in place and plunking down hundreds of thousands on renovating those homes
Despite the high costs of moving and mortgage rates, are there still some baby boomers choosing to sell their homes, and what might be motivating this decision?
Yes, despite the high costs of moving and mortgage rates, some baby boomers are still choosing to sell their homes. There are several factors that might be motivating this decision:
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Downsizing: Some baby boomers may find their current homes too large and difficult to maintain, especially as they age. Downsizing to a smaller, more manageable home can make daily living more comfortable and reduce maintenance costs.
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Financial reasons: Some baby boomers may be motivated to sell their homes due to financial reasons. For instance, they may want to tap into their home equity to fund their retirement or pay for healthcare expenses. Selling their home can provide them with the necessary funds to cover these costs.
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Lifestyle changes: Some baby boomers may choose to sell their homes to pursue a different lifestyle. For example, they may want to move to a warmer climate, be closer to family, or live in a community with more amenities and social activities.
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Estate planning: Selling their home can also be part of a baby boomer's estate planning strategy. They may want to simplify their assets and ensure their heirs receive a more manageable inheritance.
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Mortgage-free status: Some baby boomers may have paid off their mortgages and are now in a position to sell their homes without the burden of a mortgage. This can make the process of selling and moving more financially feasible.
While these factors may not apply to all baby boomers, they do explain why some are choosing to sell their homes despite the high costs associated with moving and mortgage rates.
What percentage of baby boomers own their homes outright without a mortgage, according to Eric Finnigan from John Burns Research and Consulting?
According to Eric Finnigan, vice president of demographics for John Burns Research and Consulting, more than half of baby boomers own their homes outright without a mortgage2.
How have mortgage rates changed since the pandemic, and what impact has this had on baby boomers' decisions to move?
During the pandemic, mortgage rates reached historic lows, which led to a refinancing boom3. However, since then, rates have increased significantly, reaching a more than two-decade high in October last year. This rise in mortgage rates has influenced baby boomers' decisions to move or stay in their current homes.
Baby boomers, who make up more than a third of all homeowners and mostly have lower or no mortgage rates on their homes, find it financially unappealing to move and take on a higher mortgage rate in the current market. Additionally, many baby boomers have invested in home renovations to make their homes more comfortable and safe for aging, further reducing the incentive to move.
As a result, the majority of baby boomers have no plans to move, even though they may be living in larger homes that millennials, who are starting families, need. This generational divide has created a challenging housing market, with low inventory levels and rising costs for younger homebuyers.