Are Boomers to Blame for the 2023 Housing Shortage?
The “Blame the Baby Boomers” long-running saga is now focused on the role the generation plays in the U.S. housing shortage, which has been a major driver of record home prices over the past couple of years.
As Fortune noted in a recent article, boomers “who seemed to get all the economic breaks” over the last 50 years are now “stealing all the starter homes and making them retirement homes instead.”
Those points were paraphrased from a conversation Fortune had with Ali Wolf, chief economist for Zonda, a housing data and consulting firm. She told Fortune that boomers who are downsizing now compete directly for homes with millennials who are finally entering the housing market.
“In today’s housing market, there’s a big overlap between select baby boomers and select millennials,” Wolf said. “The key difference here is that the baby boomer will likely be able to tap home equity by selling their existing home, allowing them to perhaps make a more compelling offer on the home compared to the millennials, especially if the latter group are still renting.”
Those views were echoed in a recent article in The Hill, which reported that millennials who are entering their prime homebuying years are competing head-to-head with boomers for many of the same homes in many of the same markets.
This has taken on two forms. Many millennials are “embracing the suburbs and even small towns” — locations that have traditionally “been the refuge of retirees,” Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors (NAR), told The Hill in an email.
Meanwhile, many boomers are looking to stay where they are, according to data from the AARP, which means fewer houses on the market.
Another trend noted by Fortune is that some boomers are moving close to their millennial offspring to help raise their grandkids. The result is that boomers are buying up homes in neighborhoods where younger generations might normally move.
Zonda is researching this trend with its “Baby Chaser Index,” which tracks cities where boomers are most likely to follow their children. Zonda research shows that roughly one-quarter of boomers are relocating to get closer to their grandchildren, Wolf told Fortune. Many are relocating to formerly affordable Southeast markets such as Charlotte, North Carolina, which suddenly aren’t so affordable anymore.
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That’s not the only way boomers are contributing to the housing shortage, either. Two years ago NPR reported that boomers have led efforts to enact zoning laws that greatly restrict the kinds of homes that can be built.
In some communities “it’s illegal to build anything other than a single-family, detached house on the majority of land, even in big cities across the country,” Brookings Institution economist Jenny Schuetz told NPR.
As a result, developers in these communities cannot build duplexes, condos, tiny houses or other dwellings that could add more density (and homes) to the market.
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