The baby boomers, those born between 1946 and 1964, have owned the bulk of real estate since 2001, and they aren't giving it up as they age as prior generations tended to do. The current breakdown for homeownership is as follows:
- Baby boomers own 44% of homes.
- Generation X owns 31% of homes.
- The silent generation owns 14% of homes.
- Millennials own 11% of homes.
Blaming boomers isn't the answer
The trend of boomers aging in place somewhat changes the real estate cycle and is one reason fewer homes are on the market today. And having fewer homes on the market makes it tough for first-time homebuyers to get a home.
But before Gen X-ers, millennials, and zoomers start talking smack about the boomers staying in their homes, think about it. What's the alternative? You wouldn't want some government policy enacted, such as one that forces a sale, would you? That would be un-American. And you wouldn't want to be treated that way, either. So blaming boomers isn't the answer here.
The main cause of the housing shortage is not boomers
Boomers have every right to keep and stay in their homes, and they certainly aren't the only -- or even the main cause -- of the current housing shortage. You can blame that on builders not keeping up with supply. Other reasons include zoning restrictions, pandemic-related foreclosure moratoriums, and investment firms that snatch up single-family homes and turn them into rentals.
The fact is, though, boomers are acting differently than prior generations regarding real estate. It's worth finding out why and what this means for investors.
Why boomers are acting differently
People born before the baby boomers, the "silent generation," often sold their homes when they aged to live with family or to move to an assisted-living facility or a nursing home. But after COVID-19, nursing homes are the last places people want to go, as one-third of coronavirus deaths happened to nursing home residents.
Another reason boomers are staying in place is not being able to afford or even find a new place to buy after selling their home. So the baby boomers are deciding to hang on to what they have and age in place.
The investor takeaway
If boomers hold the most real estate, and if boomers are aging, businesses that cater to this market should do well. Here are some examples:
House flippers take note: Home remodels seniors will probably want include features assisted living facilities have, namely step-free entranceways, homes designed with all areas as livable space, and hallways wide enough for wheelchairs. Bathrooms will be decked out with step-free showers, grab bars, and non-slip flooring, all designed to make them safer for seniors. Homes should be as bright as possible to prevent accidents that are more likely to happen in limited lighting situations. Natural light, nightlights, and bright lights for daytime will all be desirable.
The Millionacres bottom line
Generations younger than baby boomers often blame the boomers for the housing shortage. If the boomers would sell their houses when they reach retirement age, there'd be no housing shortage -- this seems to be the thought process. This is largely untrue, as boomers not selling is only one aspect of the housing shortage, and not the biggest one at that. Even if it were true, you can't simply force boomers to sell.
The housing market is always trying to, and eventually does, strike a balance between a buyer's and a seller's market. Until that happens, it can be tough to be a seller in a buyer's market or a buyer in a seller's market. In the meantime, if you can't buy a home, you can invest in businesses that serve boomer homeowners, as there are lots of them.