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.
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