Baby boomers are ageing in place as high mortgage rates discourage them from selling, leaving millennials competing for a limited supply of larger homes suitable for growing families.
More than one-third of all homeowners are baby boomers, and more than half of them are mortgage-free, according to Eric Finnigan, vice-president of demographics at John Burns Research and Consulting.
That has become a significant advantage since mortgage rates rose from historic pandemic lows to more than 7% today, after reaching a more than two-decade high in October 2023. For homeowners with no mortgage, or one at a substantially lower rate, moving can make little financial sense.
Millennials, many of whom have yet to buy their first home, face a sharply different market. The salary required to purchase a starter home has almost doubled, while the cost of home ownership is at a record high and available housing remains limited.
The generational divide is particularly clear in the market for larger properties. Empty-nest baby boomers own 28% of the country’s largest homes – those with three bedrooms or more – while millennials with children own 14%, according to a 2024 analysis by Redfin.
A decade ago, young families and empty nesters were equally likely to own large homes, the analysis found. But as boomers remain in their properties, that balance has changed.
Baby boomers invest in ageing in place
Existing home sales have fallen to their lowest level in almost three decades, with financial pressure discouraging owners from both selling and buying. A shortage of retirement homes has also made moving less attractive for older homeowners.
Instead, many are adapting their current properties to make them safer and more comfortable for the long term. Renovation work can include wheelchair-accessible routes, extra lighting, pull-out cupboards, rounded worktops, non-slip flooring and grab rails.
Marine Sargsyan, chief economist at home renovation and design platform Houzz, said baby boomers were increasingly choosing to upgrade their existing homes rather than take on higher mortgage rates. The generation led renovation activity across all age groups in the platform’s 2024 Houzz and Home Study.
Demand has also risen for walk-in showers and baths, as well as stairlifts, according to Leaf Home. Nina George, the company’s former chief growth officer, said boomers were expected to continue making improvements to keep their homes comfortable and safe.
For some homeowners, the investment has reached six figures. Brenda Edwards and her husband, who are in their seventies and live in California, spent more than $100,000 adapting their home for a wheelchair in case they need one in the future.
“We felt comfortable,” Edwards said of their decision to stay. “We have a pool. We have a spa. We just put a lot of love and effort into this yard. We want to stay.”
She added: “It would be too hard to purchase anything else,” as the couple’s house was almost completely paid off.
Some boomers are still selling, while some millennials are managing to buy. Millennials have overtaken baby boomers as the largest generation of homebuyers, according to the National Association of Realtors.
Jessica Lautz, the organisation’s deputy chief economist and vice-president of research, said the “generational tug-of-war” had continued, with millennials recovering to take the largest share of buyers.
