Baby boomers are staying in their homes for decades, smothering inventory
Nearly 40% of baby boomers have lived in their home for 20 years, Redfin finds
Americans are holding on to their homes twice as long as they did 20 years ago, with older generations finding fewer motivations to sell and move, according to a new report.
The average US homeowner has spent just short of 12 years in their home, up from 6½ years two decades ago, according to real estate brokerage Redfin. While the time homeowners stay put has fallen from the 2020 peak of almost 14 years, many incentives motivating folks to move have since flattened.
Other economic indicators suggest as much: US existing home sales hit a 30-year low last year, according to the National Association of Realtors, as homeowners remained locked in by their lower mortgage rates.
The trend was most prevalent among baby boomers, many of whom are retiring as both rates and home prices remain elevated. The lock-in effect is geographically widespread, with just a handful of affordable metros seeing homes change hands after barely seven years.
"The lock-in effect is … a significant issue among people who say they want to stay in their house longer than they expected," Mark Palim, vice president and deputy chief economist at Fannie Mae, told Yahoo Finance. "We’re not sure that there’s a magical inflection point; we think it’s more than passage of time and rates themselves."
Read more: Mortgage rates hover around 7% — is this a good time to buy a house?
Nearly half of boomers live in their homes for 20 years
Most baby boomers haven’t moved for decades, and that won't change anytime soon.
Nearly 40% of those born between 1946 and 1964 have lived in their homes for at least 20 years. Another 16% have been in their properties for 10 to 19 years, Redfin found.
For Gen Xers, more than one-third have lived in the same home for at least 10 years.
By comparison, millennials stayed in their homes for shorter periods, largely because they were more likely to switch jobs or have growing families than older generations.
According to Redfin, less than 7% of millennials — those born between 1981 and 1996 — have lived in their home for 10 years or longer, and 30% have lived in their home less than five years.
"Longer homeowner tenure, particularly among baby boomers, is an obstacle for young first-time buyers trying to break into the market," the report read.
Overall, nearly 80% of baby boomers and 72% of Gen Xers own their home, Redfin found, compared to 55% of millennials and 26% of Gen Zers.
That imbalance means younger generations trying to break into the market find virtually no inventory of existing homes at affordable prices.
A separate Redfin analysis found that empty-nest baby boomers own 3 in 10 large US homes, twice as many as millennials with children.
Many millennials who weren’t homeowners either rented or lived with their parents, further evidence of the grip older generations are maintaining on their homes.
"Americans just become renters, especially younger generations, as they just move as a renter from one location to another," Lawrence Yun, chief economist at NAR, told reporters this week.
Read more: First-time home buyer in 2024: What you need to know
Why boomers won’t give up their home
Boomers aren’t moving anytime soon because they have no reason to.
Some 54% of boomers who own their homes don’t have a mortgage, meaning they own their property free and clear. The median monthly cost of owning a home for that group, including insurance and property taxes, averaged $612 in January 2024.
As for boomers who do carry a mortgage, almost all have a low interest rate compared to today’s near 7% rate. Additionally, some state tax systems benefit folks who stay in their home longer, Redfin noted.
For instance, in Texas, homeowners over 65 can defer property taxes until the home is sold. California severely limits annual property-tax increases.
"Boomers don’t have much motivation to sell, financially or otherwise," Redfin senior economist Sheharyar Bokhari wrote in the study. "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."
Being on a fixed income combined with tightening lending standards could be another driver making boomers opt to age in place.
The median price of a previously owned home was $379,100 in January, a record high, NAR reported on Thursday. The measure surpassed wage growth for the first time in 14 months, hurting not only first-time buyer affordability but also potentially repeat buyers.
"From my perspective, I would lump fixed income into the broader category of not being able to afford to move or not being able to find any good affordable options to move to," Daryl Fairweather, chief economist at Redfin, told Yahoo Finance. "At the end of the day, it all leads back to housing affordability."
Where folks are staying put
Homeowners across the country are opting to stay in place for longer, but the West Coast led this trend.
The average Los Angeles homeowner has lived in their home for nearly 19 years, followed by almost 18 years in San Jose, Calif. This was followed by Cleveland, Ohio, (almost 18), San Francisco (almost 17), and Memphis, Tenn. (16-½). Californians had a bigger incentive not to move, partially because state law keeps property tax assessment from significantly increasing for existing homeowners.
The areas that saw the most turnover in homes were affordable metros, mostly in the South.
Homeowners held on to their homes for the shortest periods in Louisville, Ky., (just over 7 years), and for only 8 years in Las Vegas. Next was Nashville, Tenn., Charlotte, N.C., and Raleigh, N.C., which each had a median tenure of 8-½ years.
"We expect homeowner tenure to stay flat or increase slightly for the foreseeable future," Redfin researchers wrote. "While sales should pick up a bit this year, it’ll be more of a trickle than a flood."
Gabriella Cruz-Martinez is a personal finance and housing reporter at Yahoo Finance. Follow her on X @__gabriellacruz.
