Amidst retirees’ exodus from states like Florida due to issues such as weather and living costs, a contrasting trend has emerged: an increasing number of baby boomers opt to downsize to urban hubs, seeking vibrant and socially active retirement lifestyles. The dynamics of the US residential market have witnessed a dramatic shift, as the once dominant millennial home buyers find themselves losing their competitive edge to an unexpected contender: the baby boomers, most of whom are now retirees.
Recent data presented during the National Association of Realtors’ virtual Real Estate Forecast Summit has revealed a significant reversal in the home-buying landscape.
For much of this decade, millennials led the charge in purchasing properties, accounting for a substantial portion of home buyers. However, the tide has turned, with baby boomers, armed with considerable equity in their current homes, taking the lead and representing 39% of home buyers, compared to the 28% share held by millennials. This shift is primarily attributed to the retirees’ ability to make all-cash offers, outbidding younger, first-time buyers.
Jessica Lautz, the deputy chief economist and vice president of research at NAR, expressed concern over this trend, noting that millennials have been priced out of the market and are frequently losing bidding wars to all-cash buyers, many of whom are retirees.
“Half of older boomers are all-cash buyers,” Lautz said during the presentation. “So unfortunately we’re just not seeing them as active in the housing market,” she added.
CoreLogic data highlights that nearly four in ten sales now involve all-cash transactions, with a significant portion coming from older boomers.
A striking consequence of this changing landscape is the age difference among home buyers. Back in 1981, a typical repeat home buyer was 36 years old, but presently, the average age has risen to 59, driven in part by the influx of retiree buyers.
With existing home prices soaring to $410,200 in June, many home buyers are turning to new constructions, hoping for a more affordable option. However, this expectation is dashed as new builds are merely marginally cheaper, with June’s average price reaching $415,400.