Baby boomers and two decades of rock-bottom interest rates drove a structural boost to housing demand as older buyers/investors sought bigger homes as well as recreational and rental properties. As interest rates have risen and boomers die off, the question is who will buy from them and at what price?
The pandemic and a shortage of attractive retirement home options increased reluctance to downsize. Still, older homeowners will surely fall off the property ladder through death, and the downward pressure on prices promises to be significant across many countries. See some of the stats in House prices face a looming hit from the baby boomers who got rich off property:
There are two factors at play. First, the baby boomer generation is very big. Second, they are much more likely to own property than other cohorts.
In the US, the number of owner-occupiers who will stop owning homes between 2026 and 2036 will number between 13.1 million and 14.6 million, according to a 2018 paper by Dowell Myers and Patrick Simmons.
“The beginning of a mass exodus looms on the horizon,” the economists warned.
Because of the relatively large size of the baby boomer generation, the number of homeowners exiting the sector will be 42pc higher than it will have been in the preceding 10 years.
The trend is mirrored in the UK. Between 2008 and 2020, the share of homes owned by people aged over 75 jumped from 13.3pc to 18.1pc – equivalent to an extra 837,000 properties – according to the English Housing Survey.
Not only are boomers more likely to own property, but they are more likely to own more than one: holiday home ownership and buy-to-let ownership is extremely heavily concentrated amongst older generations.
;
