Will baby boomers kill the housing market?

Will a flood of baby boomers cashing out their home equity be too much for the housing market to bear? That is the question I was asked recently.

One of the difficulties in trying to make personal decisions, like whether to buy a house today in the town of your choice, based on long-term, national forecasts (for example, boomers cashing in their housing chips) is the risk of missing out on a lot of known positives – i.e., home ownership – in fear of unknown possible negatives.

But let’s look at some of those big questions. See also 4 reasons home prices will keep going up .

Who buys houses?
Almost 60% of buyers are Gen X/Y

Source: NAR

Source: NAR

What percentage of buyers are first-time buyers?
One third.

Source: NAR

Source: NAR

Make way for the Millennials
Millennials have just overtaken boomers as the largest segment of the population and already represent almost one-third of home buyers.

Population_boomers

Rents are going up and up

Source: NAR

Source: NAR

“Buying is cheaper than renting” is a favourite saying of real estate agents. As rents keep going up, so the incentive to buy increases.

Headwinds
While millennials are at an age where home ownership is the typical “next step” they have hurdles to face – such as student debt – unlike those of their predecessors. This may slow the pace of home ownership but is unlikely to change the American Dream of home ownership.

Gen Y/X see home ownership as a good investment

Source: NAR

Source: NAR

Summary
I see nothing in these numbers to suggest a baby boomer selling wave threatening the housing market.

If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com.

Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
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