Mortgage Rates at Highest in More Than a YearBy RISMedia Staff Share This Post Now! The average 30-year, fixed mortgage rate is at its highest in more than a year: 4.32 percent, according
Dec 7 2015 17170 2
Baby Boomers Blamed for Clog in Housing
DAILY REAL ESTATE NEWS | MONDAY, DECEMBER 07, 2015
Some economists say the baby boomers aren’t selling their homes like previous generations did and not downsizing fast enough, which is leading to shortages of homes for sale and rising prices.
Baby boomers are “clogging up the whole chain of home sales,” says Sean Becketti, chief economist of Freddie Mac. “They appear to be staying in the family home longer than previous generations, and the imbalance between housing demand and supply continues to boost prices.”
Baby boomers are big players in real estate. In 2013, people age 55 and older controlled two-thirds of all home equity, according to the Federal Reserve’s most recent Survey of Consumer Finances.
In previous generations, once the kids have moved out of the house, empty nesters tended to downsize and move to smaller homes or rent apartments. But so far, boomers haven’t made a move.
“Economists say boomers’ slower-than-expected rate of downsizing and selling is playing a contributing role in supply, demand and pricing imbalances in local markets — not creating those imbalances,” The Washington Post reports.
Lawrence Yun, chief economist for the National Association of REALTORS®, told The Washington Post that the lingering effects of the housing crisis and the Great Recession may be the reason why more baby boomers are postponing their moves. From 2008 to 2011, home owners of all ages lost lots of equity and many home owners may still be rebuilding equity to allow them to sell and move without having to bring money to closing, Yun says.
But Fannie Mae’s Patrick Simmons, an economics and strategic research group director, says that the clog in the real estate pipeline from baby boomers not moving will not likely hold for much longer. “Boomers will not inhabit this vast inventory [32 million homes] forever,” he says. Their circumstances will inevitably change with age and they will move, and “their actions will reverberate through the housing market.”