Millennials entering the real estate market looking for a home have a lot to worry about: where to obtain a mortgage loan, what kind of house they want, where they want to live, and what can they afford. One thing they weren’t likely worrying about is Baby Boomers refusing to sell their homes.
This is contributing to the lack of inventory affecting the country. Currently, the housing market is sitting at a housing supply rate of 4.3 percent.
A Realtor.com Housing Supply Report noted that 85 percent of Baby Boomers have no plans to sell their house in the next year. It doesn’t help that the Baby Boomers own over fifty percent of all owner-occupied houses in America. You look at those numbers together and you see that a sizeable chunk of real estate is out of reach for at least a year, if not longer.
That isn’t doing the housing market or Millennials any favors.
What are the reasons that the Baby Boomers won’t sell? There are several.
The biggest reason they aren’t selling is because their current residence fit their needs. Baby Boomers aren’t going to move as long as they believe their home is providing everything they want. For them, that includes their home being the right size with the features they desire, a community where they are comfortable and more. They aren’t interested in uprooting their lives for an unknown when they currently have a known they enjoy.
Other factors feeding their reluctance to move is that they may be enjoying low interest rates. Another element is concerns about financial security. Owning a house is a large financial commitment, Baby Boomers don’t want to risk upending their finances for a new home or they could even be tied up in paying a mortgage worth more than their house. The last thing they want to do is capsize their finances.
The final factor at play according to the study is the need to make home improvements. Baby Boomers know well the way to the best price for their home is to have it updated with improvements to meet the latest trends. They want to improve their homes, but either don’t have the time or the money or even both to get improvements started and finished in a timely manner.
A few other components leading to this stalemate were not covered in the study.
In this article, Baby Boomers related some other reasons preventing them from selling. Chief among them is that they don’t want to uproot their lives when they are comfortable. They have friends nearby, a garden to grow plants in, children and grandchildren within driving distance. It’s just not worth giving up those little joys to them to move to another home.
Another article found the same results. Baby Boomers simply like where they live and see no reason to move. Even getting away to Florida or Arizona, traditionally the prime locations for retiring Baby Boomers, are less desirable because those spots are too far away from friends and family.
All of these factors are making it a headache for Millennials who want a home, but can’t purchase one because Baby Boomers are staying still. It appears that, until those Baby Boomers find more pros than cons in moving, they will be staying put. For Millennials who want a home, they have to provide Baby Boomers with good reasons to move more than just throwing money at them.
Until then, inventory will stay low and housing will stay out of reach for many Millennials.
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