We’ve heard a lot of reasons why affordable home inventory is low in Chicago and other areas of the country. The usual culprits involve home builders and investors, and we’ve discussed the real estate dynamics in one of our prior blog posts. Today, the real estate media has offered a new scapegoat for the housing shortage: Baby Boomers!
Boomers represent the generation born between 1946 and 1964. While they are currently outnumbered by the Millennial generation, Boomers still control 70% of all disposable income in the United States, and will hold the majority of the nation’s wealth through 2030, according to a study by the Deloitte Center for Financial Services. It turns out that Boomers also own the lion’s share of residential real estate; Bloomberg reports that Boomers own 53% of all owner-occupied homes. This is the largest share of real estate ownership by any generation since the government began tracking it in 1900.
On the heels of the Bloomberg article, comes a new “Housing Shortage Survey” that says Boomers aren’t going to sell their homes until they’re darn good and ready. About 85% of surveyed Boomers issued a resounding raspberry when asked if they planned to sell their home in the near future. This means some 33 million homes aren’t coming to market anytime soon.
Heck, just for spite, Boomers might buy even more real estate to pad their retirement fund, or to set up a vacation home. Though they’re in no hurry to retire; an estimated 45 million Boomers are still employed in some capacity.
We’re not Boomer-bashing; plenty of Boomers lost homes during the Great Recession, and certainly not all of them are rich. Many are working well into their retirement years not by choice, but by necessity. The reasons they are holding on to their current homes are multi-faceted. They see aging-in-place as a more desirable and affordable solution than moving to a retirement home. They also like their current home, and have resisted the idea of downsizing, even as adult children leave the nest. Additionally, they see the wisdom of paying off their mortgage, and living rent-and-mortgage free.
Simply put, Boomers made some smart home buying decisions in the past, and they want to stay and reap the benefits. Who can blame them? So yes, Boomers may be holding much of Chicago’s real estate at the moment, but it isn’t fair to lay the housing shortage at their feet. Instead, they are part of a “perfect storm” of real estate conditions that have kept home inventory lean.
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Ryan Gable Broker/CEO Starting Point Realty
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