Empty Nesters Own Twice As Many Large Homes As Millennials With Kids

Rhea-AI Summary

Empty-nest baby boomers own 28% of the nation’s large homes, while millennials with kids own just 14%. The landscape has transformed over the last decade: 10 years ago, young families were just as likely as empty nesters to own large homes. Baby boomers own an outsized share of large homes for several reasons, current and historical. Boomers built wealth through favorable economic conditions and investments in real estate. There is not much financial incentive for boomers to let go of large homes, as most own homes with no mortgage. Millennials and Gen Zers face challenges in finding and affording large homes due to the mortgage-rate lock-in effect and a lack of homebuilding. Additionally, some young Americans are not interested in homeownership, and others are renting large homes in the meantime. The share of large homes owned by each generation and household type has changed over the last decade, with baby boomers owning a much bigger share of large homes than they did 10 years ago, and young families owning a smaller share.

Positive

• Empty-nest baby boomers own a significant share of large homes in the US, almost twice as many as millennials with kids.
• Baby boomers own an outsized share of large homes due to favorable economic conditions, real estate investments, and low housing costs.
• There is not much financial incentive for boomers to let go of large homes, as most own homes with no mortgage.
• Millennials and Gen Zers face challenges in finding and affording large homes due to the mortgage-rate lock-in effect and a lack of homebuilding.
• Some young Americans are not interested in homeownership, and others are renting large homes in the meantime.
• The share of large homes owned by each generation and household type has changed over the last decade, with baby boomers owning a much bigger share of large homes than they did 10 years ago, and young families owning a smaller share.

Negative

• The housing market is experiencing a shortage of large homes, making it difficult for younger generations to find and afford them.
• Millennials' lack of interest in homeownership could negatively impact the real estate market in the long run.
• The share of large homes owned by young families has decreased over the last decade, indicating challenges in homeownership for younger generations.

Economist

An analysis of generational home ownership trends, as presented in the data from Redfin, suggests a significant disparity in real estate assets between baby boomers and younger generations, particularly millennials with children. This disparity is rooted in a combination of historical economic advantages and current market dynamics. Baby boomers benefited from lower home prices relative to incomes, lower interest rates and a period of economic prosperity that allowed them to accumulate wealth, much of which is now tied up in real estate.

From an economic standpoint, the high percentage of large homes owned by baby boomers without mortgages creates a low financial incentive for them to sell. This contributes to a constricted supply of large homes on the market, exacerbating the affordability issues faced by millennials and Gen Zers. Moreover, current near-7% interest rates discourage downsizing among boomers, further limiting market liquidity. The generational wealth gap in real estate is not only a reflection of past economic conditions but also a driver of current market dynamics, influencing housing supply and affordability for younger buyers.

Market Research Analyst

Demographic shifts are a critical factor in understanding the housing market. The data indicates that baby boomers are more likely to own large homes, while millennials and Gen Zers struggle to enter the market. This has implications for businesses in the housing industry, including real estate firms, construction companies and mortgage lenders. The preference of millennials for renting over buying, as well as the trend of living with parents or roommates, suggests a shift in housing demand towards rental properties and potentially smaller, more affordable units.

For businesses operating in these sectors, strategic planning must account for these trends. For example, developers may find opportunities in constructing more moderate-sized homes or developing rental communities that cater to younger families. Mortgage lenders might need to consider innovative financing solutions to address the affordability challenges faced by younger homebuyers.

Urban Planner

The concentration of large home ownership among baby boomers has implications for urban development and planning. The data suggests that certain areas, particularly Rust Belt and southern metros, have a higher proportion of baby boomers owning large homes. This may affect the demographic composition and service needs of these areas. Conversely, popular migration destinations and California metros, where younger families are less likely to own large homes, might experience different growth patterns and housing demands.

Urban planners and policymakers need to consider how these ownership trends impact local economies, infrastructure and services. For instance, there may be a need for more age-appropriate housing for baby boomers looking to downsize in the future, as well as for family-friendly housing options for younger generations. The intergenerational transfer of wealth, including real estate assets, will also be a significant factor in shaping future urban landscapes.

Empty-nest baby boomers own 28% of the nation’s large homes, while millennials with kids own just 14%. The landscape has transformed over the last decade: 10 years ago, young families were just as likely as empty nesters to own large homes

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Empty-nest baby boomers own nearly 3 in 10 (28.2%) large U.S. homes. That’s twice as many as millennials with kids, who own just 14.2% of the country’s large homes, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Gen Zers with kids own almost none (0.3%) of them.

An additional 7.5% of the country’s large homes are owned by baby boomers with households of three adults or more; this category likely consists mostly of adult children living with their boomer parents.

The report is based on a Redfin analysis of U.S. Census data from 2022 that breaks down the share of three-bedroom-plus homes owned and occupied by each generation, by household type and size. For the purposes of this report, Redfin used the term “empty nesters” to refer to households headed by baby boomers with 1-2 adults living in the home. See the report for full details on methodology.

It’s worth noting that even though millennials with kids own half as many large homes as empty nesters, there are more millennials than baby boomers. Millennials make up roughly 28% of the country’s adult population, the largest share of any generation. They’re followed by baby boomers (27%), Gen Xers (25%) and Gen Zers (12%).

Baby boomers own an outsized share of large homes for several reasons, current and historical:

• There’s not much financial incentive to let go of large homes. Most (54%) boomers who own homes have no mortgage. For that group, the median monthly cost of owning a home, which includes insurance and property taxes, among other costs, is just $612. For the boomers who do have a mortgage, nearly all have a much lower interest rate than they would if they sold and bought a different home with today’s near-7% rates: Even if they downsized, they may have a nearly identical monthly payment.
• For millennials and Gen Zers, it’s harder to find and afford a home. Large homes are in short supply, largely due to the mortgage-rate lock-in effect and a recent lack of homebuilding. Large homes are also hard to afford: 2023 was the least affordable homebuying year on record; it was especially hard for younger Americans who don’t have equity from a prior home.
• Some young Americans don’t want to own a home. A recent Redfin survey found that 12% of millennials who believe they’ll never own a home aren’t interested in homeownership, and 7% said they don’t plan to buy because they don’t want to maintain a home.
• Boomers built wealth. Many older Americans benefited from an abundance of newly built homes and favorable economic conditions during their prime moneymaking years, during the 1990s economic boom. Those homes proved to be good investments: Home values have grown four times faster than incomes over the last several decades. Today, boomers hold half of the wealth in the U.S., and much of it is in real estate.
• Boomers are older, so they’ve had more time to buy homes.

“There’s unlikely to be a flood of large homes hitting the market anytime soon,” said Redfin Senior Economist Sheharyar Bokhari. “Logically, empty nesters are the most likely group to sell big homes and downsize: They no longer have children living at home and don’t need as much space. The problem for younger families who wish their parents’ generation would list their big homes: Boomers don’t have much motivation to sell, financially or otherwise. They typically have low housing costs, and the bulk of boomers are only in their 60s, still young enough that they can take care of themselves and their home without help. Still, some boomers are ready to downsize into a condo or move somewhere new for retirement, and the mortgage-rate lock-in effect is starting to ease–so even though there won’t be a flood of inventory, there will be a trickle.”

Many young families are renting large homes in the meantime. Millennials with kids take up one-quarter (24.8%) of the three-bedroom-plus rentals in the U.S., the largest share of any generational category, followed by millennials without kids (11.6%). Empty-nest baby boomers take up the next-highest-share (11.4%) of three-bedroom-plus rentals.

45% of empty nesters own big homes, almost double the share of millennials with kids

The above addresses the share of large homes owned by each generation and household type. In looking at the share of each generation and household type that owns large homes, Redfin found that empty-nest baby boomers are almost twice as likely as millennial families to own three-bedroom-plus homes. Nearly half (45.5%) of one-to-two-person boomer households own large homes while just over one-quarter (27%) of households consisting of millennials with kids own large homes. Roughly 3% of Gen Zers with kids own them.

What type of home do the rest of millennials with kids live in?

Some young families rent large homes: Roughly 1 in 10 (9.3%) millennial-with-kid households live in three-bedroom-plus rentals. Others rent smaller units.

Other millennials live with family or roommates. Of all U.S. millennials (whether they have kids or not), roughly 17% of them live with a family member in a home that family member owns or rents–most likely their parents. Another 10% live in a home owned or rented by someone they’re not related to–most likely a roommate. Seven in 10 are the head of their own household, whether they’re owning or renting.

Older Americans own a much bigger share of large homes than they did 10 years ago, and young families own a smaller share

Who owns large homes has changed over the last decade. In 2012, empty nesters of the silent generation (who were 67-84 at the time) took up 16% of three-bedroom-plus homes. That’s a smaller share than Gen Xers (who were 32-47 at the time) with kids, who took up 19% of those large homes.

But one thing has remained the same over time: Baby boomers with no kids living at home take up the lion’s share of big houses. In 2012, empty-nest boomers (who were then 48-66) owned and occupied 26.4% of three-bedroom-plus homes in the U.S., comparable to today’s share.

Empty nesters take up at least 20% of large homes everywhere in the U.S.

Empty-nest baby boomers take up the biggest share of large homes in relatively affordable Rust Belt and southern metros. Baby boomers with one or two people in the household take up roughly one-third of three-bedroom-plus homes in Pittsburgh, PA (32.1%), Birmingham, AL (31.1%) and Cleveland, OH (30.8%), the highest shares in the nation. Next come Buffalo, NY (30.5%) and Virginia Beach, VA (30.4%). Demographics are one reason why Pittsburgh tops this list; the metro skews older: Baby boomers make up 40% of Pittsburgh’s households, a far higher share than Gen Xers (27%) or millennials (20%).

Empty nesters own at least 20% of large homes everywhere in the country. They take up the smallest share of three-bedroom-plus homes in popular migration destinations and California metros: Riverside, CA (21.9%), Salt Lake City, UT (22%), Austin, TX (22.2%), Houston (23.2%) and San Jose, CA (23.7%).

No matter the metro, millennials with kids take up no more than 18% of three-bedroom-plus homes

Young families take up the smallest share of large homes in coastal California and Florida, where large homes tend to be more expensive, and the largest share in relatively affordable inland metros.

Just about one of every 10 three-bedroom-plus homes are owned and occupied by millennials with kids in Los Angeles (9.4%), San Jose, CA (10.4%), San Francisco (10.9%), Miami (11.2%) and New York (11.8%) Millennials with kids have the largest share in Indianapolis, IN (17.6%), Minneapolis (17.4%), Cincinnati, OH (17%), Kansas City, MO (16.5%) and Riverside, CA (16.5%).

To view the full report, including, charts and metro-level data, please visit: https://www.redfin.com/news/empty-nesters-own-large-homes

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240116359240/en/

Redfin Journalist Services:

Angela Cherry, 913-638-8249

press@redfin.com

Source: Redfin

FAQ

What percentage of large homes are owned by baby boomers?

Baby boomers own 28% of the nation’s large homes.

What percentage of large homes are owned by millennials with kids?

Millennials with kids own just 14% of the country’s large homes.

What are the reasons for baby boomers owning an outsized share of large homes?

Baby boomers own an outsized share of large homes due to favorable economic conditions, real estate investments, and low housing costs.

What challenges do millennials and Gen Zers face in finding and affording large homes?

Millennials and Gen Zers face challenges in finding and affording large homes due to the mortgage-rate lock-in effect and a lack of homebuilding.

What is the share of large homes owned by each generation and household type?

The share of large homes owned by each generation and household type has changed over the last decade, with baby boomers owning a much bigger share of large homes than they did 10 years ago, and young families owning a smaller share.