Real estate is strongly driven by demographic trends. As Baby Boomers and earlier generators get older, what are they doing with the $13.5 trillion in homes they own? Are Millenials ready to become home owners as they start their families?

1. Baby Boomers Are Exiting the Housing Market

 As Boomers age, will they sell? Will the next generations be able to buy? Source: The Washington Post As Boomers age, will they sell? Will the next generations be able to buy? Source: The Washington Post

Traditionally, as people age and become empty nesters, they downsize their home to something smaller or choose to age in place and not move. This is no longer the case. Home purchases from the 55+ set dropped 9% over the past year, even while overall home purchases have increased.

Many more boomers are exiting the market altogether and opting for rentals instead. This could explain the increase in luxury 55+ rental communities. When you’re ready to enjoy your retirement, why bother having to deal with home maintenance, too?

2. Millennials With Children Remain in the Rental Market

Despite all the inventory leaving the hands of the Boomer generation, many Millennials still find home ownership out of reach. This is likely due to high student loan debt making mortgage payments more difficult rather than poor credit worthiness. Even though half of Millennials think their credit score is holding them back, this is likely due to a misperception that they need 800+ scores or perfect credit to qualify for loans.

Either way, having children is no longer a strong indicator that a young person will try to become a homeowner. Across the country, homeownership among young families is decreasing.

3. The Housing Boom Is Getting Old

But how does it compare to past booms? CalculatedRisk writes that this is neither the longest housing boom nor economic expansion in recent US history. Those titles go to Jan ’91 to Nov ’98 (94 months) for housing and Mar ’91 – Mar ’01 (120 months) for the economy. Our current housing run is 89 months. The economy has been expanding for 109 months. The blogger economist reminds readers that expansions don’t die of old age. Based on the recent economic trends, there is a lot of reason for optimism that the expansion can continue.

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