Baby boomers will be selling their homes, but will their children want to buy them?
As home-owning baby boomers age, they’ll eventually be leaving their homes. But it’s unclear whether the next generation will be eager or willing to buy them, according to a new paper from the Bipartisan Policy Center. As John Pitkin and Dowell Myers wrote in 2008,“The sell-off of seniors’ former housing creates a potential supply that will potentially exceed younger adults’ effective demand.”
Babyboomers will be vacating more homes than they occupy as they move into nursing homes, move in with their children, or pass away over the next two decades. They’re expected to release a net total of as many as 26 million housing units by 2030, according to the report. And young people might not be willing or able to buy new homes.
Young adults have higher levels of credit card and student loan debt than their predecessors, some of which could take decades to pay off, and they’re expected to inherit less wealth from their parents as well, given the recent bust. Exacerbating the problem is the current downturn, which has already scared off young people from buying houses and could cut into Generation Y’s future earnings and wealth as well. And even those who may be financially capable of buying homes may be more reluctant to do so after having witnessed the impact of the housing bust, as Derek Thompson points out.
As a result, conditions that are currently holding back the housing recovery—and the larger economy—could also cast a shadow in the decades to come: not enough homebuyers and many more renters, which could depress home prices while keeping rents high as Generation Y grows up.