A recent article in the Denver Business Journal makes a compelling case that the current housing market may be pitting Millennials against Baby Boomers.
According to sources in the article, Millennials take the top spot as the single biggest generation among current homebuyers. But increasingly, they find themselves competing against Boomers when shopping for homes. Zillow research cites a 47 percent increase in over-60 homebuyers from 2009 and 2019. There are simply more Boomers looking to downsize or move, and they often end up bidding against buyers who are their children’s age.
Millennials are at a disadvantage. Many are weighed down by student debt, and they’re seeing home prices climb at
a staggering pace, requiring bigger down payments. Between 2009 to 2019, home values grew 31 percent, and have increased another 22 percent since then. This has driven many first-time homebuyers out of the market.
Boomers tend to have a big advantage in an escalating market. Most own homes and can tap equity that has kept pace with market growth. They also tend to have higher incomes at the end of their careers versus Millennials who are newer to the workforce.
The competition with Boomers explains why younger homebuyers are moving to more affordable metros such as Buffalo, New York and Salt Lake City, Utah where buyers ages 18 to 39 represent 57 and 56 percent of those metros respectively.
There are some factors that help first-time and younger buyers: the trend toward remote work allows workers to live nearly anywhere and make a living; regulatory changes are increasing available inventory in some areas; and programs that allow homebuyers to put less than 20 percent down, combined with low interest rates, are putting homeownership within reach for more buyers.