Boomers' Equity Hoard Is Locking Out First-Time Buyers, Not Millennials
The mainstream 'housing crisis' narrative ignores how older generations' wealth is reshaping the market for younger families.
The direct answer
The widely reported 'housing crisis' often blames younger generations for not buying homes, but this narrative misses a crucial demographic: Baby Boomers. While young families struggle with affordability, older homeowners, sitting on unprecedented equity, are increasingly choosing to stay put or leverage their assets rather than sell
State of home service spending (HVAC) 72% of homeowners plan to stay in their current homes for the foreseeable future When people buy a home, 20% - 25% of the time they replace the HVAC system But there’s a double hit to replacement demand Existing homeowners sitting on… https://t.co/novAXfbd3N
— Will Schryver link
. This market dominance, fueled by decades of home appreciation, means less inventory is available for first-time buyers, effectively locking them out. Peter St. Onge, Ph.D., notes a stark imbalance with half a million more house sellers than buyers, a situation not seen since 2008, and highlights that the average American has two-thirds of their retirement tied up in their home
There are now a half million more house sellers than buyers. That's the worst since the 2008 housing crisis. The average American has two-thirds of their retirement in their home. If housing breaks, they break.
— Peter St Onge, Ph.D. link
. The preference for aging in place, or utilizing home equity for other investments, effectively constricts the market for those trying to enter it, shifting the dynamics of wealth transfer away from younger generations.
The Equity Advantage: Boomers' Financial Fortress
Baby Boomers are not just homeowners; they are equity millionaires. Many own homes purchased decades ago, now worth significantly more than their original cost. This substantial equity acts as a financial cushion, enabling them to delay selling or even purchase additional properties. For instance, a couple in their 70s might have $500,000 in home equity and another $450,000 in rental property equity, alongside substantial retirement funds
Just spoke to a married couple in their 70’s in my market. They have: - $500,000: Personal home equity - $450,000: Rental property equity in 5 rentals they bought during the COVID boom (no cash flow) - $300,000: 401k’s / IRAs - $30,000: Cash On paper they’re millionaires, but:…
— Jon Brooks link
. This financial security allows them to make decisions not dictated by immediate market necessity, such as delaying HVAC replacements because they plan to stay put, a trend impacting service industries as well
State of home service spending (HVAC) 72% of homeowners plan to stay in their current homes for the foreseeable future When people buy a home, 20% - 25% of the time they replace the HVAC system But there’s a double hit to replacement demand Existing homeowners sitting on… https://t.co/novAXfbd3N
— Will Schryver link
. This contrasts sharply with first-time buyers, who often lack significant down payment savings and face escalating interest rates.
Inventory Squeeze: The 'Aging in Place' Effect
The desire to age in place, coupled with the financial leverage provided by home equity, significantly constrains housing inventory. When older homeowners decide to stay put, they remove potential properties from the market that could otherwise be purchased by younger families. This isn't a new phenomenon, but the scale is unprecedented. Peter St. Onge, Ph.D., points out a concerning trend: 'There are now a half million more house sellers than buyers. That's the worst since the 2008 housing crisis'
There are now a half million more house sellers than buyers. That's the worst since the 2008 housing crisis. The average American has two-thirds of their retirement in their home. If housing breaks, they break.
— Peter St Onge, Ph.D. link
. This imbalance suggests that the supply side, dominated by older sellers who may be hesitant to move, is a primary driver of current market conditions. This creates a double bind: fewer homes available means higher prices and increased competition for those few that do come onto the market.
Intergenerational Wealth Transfer: A Stalled Pipeline
The current housing market dynamics are fundamentally altering intergenerational wealth transfer. Instead of downsizing and freeing up capital that could be passed down or reinvested, many older adults are holding onto their homes. This means that the expected transfer of wealth, often through inherited property or the sale of family homes, is delayed or diminished. The significant equity locked in homes means that while older generations may be 'on paper' millionaires
Just spoke to a married couple in their 70’s in my market. They have: - $500,000: Personal home equity - $450,000: Rental property equity in 5 rentals they bought during the COVID boom (no cash flow) - $300,000: 401k’s / IRAs - $30,000: Cash On paper they’re millionaires, but:…
— Jon Brooks link
, that wealth isn't circulating into the market in a way that benefits younger generations looking to buy. This also raises ethical considerations for professionals working with older sellers, as noted by Shawn Gorham regarding a 92-year-old seller: 'What I have noticed about older sellers they have...'
92 year old seller - still very sharp First thing I did is ask if she had family close and make sure they were in the meeting I could have swiped a lot of equity, but then I would have to look in the mirror and sleep at night What I have noticed about older sellers they have…
— Shawn Gorham link
, implying a need for careful handling of significant assets during transitions.
Common mistakes
- Focusing solely on first-time buyer affordability without acknowledging seller demographics.
This overlooks the primary reason for low inventory: older homeowners leveraging equity to stay put, which is a direct consequence of their financial position, not a failure of younger buyers. - Blaming millennials or Gen Z for market conditions.
This ignores the overwhelming market power and equity held by Baby Boomers, whose decisions about their homes directly impact availability and price for younger generations. - Presenting the housing market as a simple supply-and-demand issue without generational context.
The 'supply' side is heavily influenced by the wealth and lifestyle choices of older generations, making it a complex intergenerational economic issue, not just a basic market fluctuation.
State of home service spending (HVAC) 72% of homeowners plan to stay in their current homes for the foreseeable future When people buy a home, 20% - 25% of the time they replace the HVAC system But there’s a double hit to replacement demand Existing homeowners sitting on… https://t.co/novAXfbd3N
— Will Schryver link
. This isn't about young people not wanting homes; it's about older generations' financial positions inadvertently creating an insurmountable barrier for them. The current market conditions are less a failure of youthful ambition and more a consequence of generational wealth concentration and its impact on housing availability and affordability.
Frequently asked
Are Boomers intentionally keeping younger generations from buying homes?
It's not necessarily intentional malice, but the consequence of Baby Boomers' substantial home equity and preference to age in place or leverage their assets. This significantly reduces available inventory, making it harder and more expensive for first-time buyers to enter the market. Their financial security allows them to make choices that inadvertently create barriers for others.
How does home equity affect the housing market for young buyers?
When older homeowners have significant equity, they are less pressured to sell. This keeps homes off the market, reducing supply. Lower supply, especially in desirable areas, drives up prices, making it harder for first-time buyers who typically have less equity and face higher interest rates to afford a home.