The Millennials are numerically the largest generation, having finally overtaken the Boomers, and there’s a huge amount of anxiety (and media coverage) of the housing crunch they face, and how they might deal with it. A shockingly high percentage still live, as adults, with their parents. And what underemployment, the burden of college debts, and firming (if not rising) house prices, there are understandable worries about the impact of the Millennials’ housing choices on the housing market, and indeed the entire economy.
But a new report from Freddie Mac, outlined by Mortgage News Daily online, suggests we forget about the Millennials for a moment, because it’s the Boomers who really control the fate of the housing market.
There are three reasons:
- The 55+ age group controls about two thirds of all primary residence equity;
- They will account for more than half of the growth in the number of households between 2010 and 220;
- They have a number of critical decisions to make about their future housing needs, and those decisions will drive everything else.
From the report:
Freddie Mac says there are some significant issues regarding decisions of the over 55 age group. Among these are:
- Their future housing plans. Will more of them age in place or downsize? How will that decision affect housing supply and prices? How will the prospect of longer lifespans affect those decisions? Are they responsible for dependents – children or parents – for longer than they anticipated? Are their plans affected by other family members’ geographic locations?
- How did the Great Recession impact this group? How greatly were retirements delayed because of financial set-backs? Did the recession have different impacts on the already retired as opposed to the not-quite retired?
- Does this generation need better information about their housing alternatives? How well do they understand their financial situation? Is age appropriate housing counseling readily available? How well are affordable housing needs being addressed for this age group?
- How will the 55+ group manage their housing wealth?
- How is the construction industry adapting to the growth in 55+ households?
We’ve already seen how the actions of the Boomers — i.e., continuing to work pas the traditional retirement age of 65 — are affecting the Millennials in the job market. Now the same thing is going to happen in housing. We really are in an era of intergenerational action, reaction, and dependency.