Boomer Housing Trends: What Makes Them Buy, Sell

A fast-approaching shift in the housing market may be closer than speculated, as more than 30% of baby boomers — nearly 24 million people — have recently purchased a home, while 43% — roughly 33 million — have recently become home sellers, according to new survey findings. 

And, despite some research suggesting otherwise, the demographic does show an inclination to downsize to smaller homes, which could be a positive sign for the reverse mortgage industry, whose home equity conversion mortgage (HECM) for Purchase product could make it easier for boomers to do so. 

Still, some findings in the National Association of Realtors’ (NAR) 2015 “Home Buyer and Seller Generational Trends” survey may be even more surprising. 

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The survey largely splits up the cohort into two groups — younger boomers and older boomers — likely reflecting the ages of trailing-edge boomers (born between 1956 and 1964) and leading-edge boomers (born between 1946 and 1955).  

While the two subsets have significantly different motivations for buying and selling, it’s clear they’re both moving the needle on the housing market. 

Boomers and Home Buying

Of those that purchased a home between July 2013 and June 2014, 16% represent younger boomers and 15% represent older boomers, according to the survey of 6,572 Americans. 

Reasons behind buying vary, but include retirement, job relocation, downsizing and a preference to be closer to friends and relatives. 

For example, older boomers are more likely to move for retirement (15%), the desire to be closer to friends, family and relatives (9%) and to move into a newly built or custom-built home (6%). 

On the other hand, younger boomers are likely to move for a job-related relocation (16%), to downsize (13%) and for retirement (7%).

Additionally, the report suggests older buyers in general tend to move farther distances and are more likely to buy in other regions compared to younger buyers who are more likely to buy in the same state as their previous home. 

In analyzing what types of homes the older cohort purchases, the survey shows that 13% of buyers over the age of 49 purchased a home in senior housing for themselves or others. This is most common for buyers over the age of 69, a category in which nearly one-quarter of buyers purchased a home in senior housing.

Boomers and Home Selling  

Among recent home sellers, Gen X comprises the largest percentage (27%), followed by older boomers (23%) and younger boomers (20%), according to the survey. 

For older home sellers, reasons behind listing their homes on the market ranged from job relocation and neighborhood preferences to downsizing and retirement purposes. 

Those ages 50 to 59, for instance, reported the primary reasons for selling their previous homes were job relocation (19%), a change in family situation (14%), to downsize (13%) and neighborhood preferences (11%).

In comparison, those ages 60 to 68 reported the following reasons, among others, for selling their home: a desire to live closer to friends and family (23%), moving due to retirement (19%), to downsize (15%) and neighborhood preferences (8%). 

Despite the differences in motivations, both older and younger boomers are active in the housing market, which could lead to a big shift in the coming years.

Written by Emily Study

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  • As to downsizing, the younger Baby Boomer group was at 13% and the older was at 15%. That indicates no significant increase in the inclination of older Baby Boomers to downsize than their juniors, at least for now. So where does all of this unwarranted promotion of the idea that today’s older Baby Boomers want to downsize come from? Ignorance? It certainly does not show in NAR statistics.

    This is part of the problem we have in the industry. Someone will ignorantly promote an idea he/she thinks is true with no actual knowledge of its veracity and then others pick it up without checking to see if it is true.

    When it comes to H4P generally it has gotten so bad that some so called experts advise to ignore history and endorsement facts. What they really mean is accept their standard of what is true and what is not because they lack meaningful information to show that H4P is anything more than a very minor (but NECESSARY) part of the HECM market.

  • We all know that our share of annual purchase money mortgages should be about 70,000 per year. What these stats show is that among those under 70 about 15% of our H4P business should be coming from Baby Boomers downsizing. No doubt that percentage will increase as the oldest Baby Boomers age further.

  • Downsizing is a myth for many reasons. I’m tired of hearing that seniors should rent, downsize–or worse yet, lease their primary residence for income. None of these so called solutions make financial sense unless the numbers work (and the 80 year old wants to be a landlord). Downsizing doesn’t always cost less and there’s a price to pay that can’t be quantified-giving up mementos and space for family to visit.

    Seniors who have already decided to purchase a lifestyle are the best market for H4P. Either to move near family or live in a desirable area or lifestyle community. Some of those are cash buyers and the builder and realtor are not likeky to refer away their quick sale! The referrals you want are the ones who can’t pay full cash price for that lifestyle. It’s a very small market. You have to continually talk to a lot of realtors. Maybe 1000s. There are fewer builders but the COO issue is also a hurdle with them, especially in a market when there are plenty of other buyers.

    In a tight inventory market, cash is king. All FHA buyers are being left behind, and H4P is an FHA buyer with conditions.

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