Some baby boomers are targeting the rental market, while others are holding back.
As the generation with the greatest wealth from real estate, baby boomers have a big impact on the rental and housing markets.
Founded in 2017 Rhinoceros an insurance agency that offers an alternative to cash security deposits. With Rhino insurance, tenants can opt out of prepayment by paying a small monthly fee to Rhino, who then insures the apartment.
In a blog post, Le wrote that boomers are attracted to the rental market for a variety of reasons, including a no-maintenance lifestyle, the ability to move easily, and socialization.
“As you get older, you have to focus on so many things. Living in an apartment allows you to focus on the important things and get rid of the time-consuming things, ”the 60-year-old tenant told CNBC.
As of June 2021, 9.74 percent of Rhino tenants were over 50, up from 0.55 percent in October 2019.
But as demand from boomers increases, the gap in affordability for younger generations in the rental market is widening.
“Baby boomers have the cash flow to buy a good enough rental home, especially compared to their millennial counterparts. They have $ 59.4 trillion in generational wealth compared to the $ 5 trillion that millennials have. This is twelve times more, ”Le wrote. “If they continue to grow as rental populations, baby boomers will have a profound impact on the price and quality of rental housing. It won’t be easy for millennials, many of whom already pay more than 30% of their income in rent. ”
By 2035 RentCafe predicts that tenants over 60 will account for nearly a third of the US rental market.
“Taking into account the current state of the market with rising inflation and a sharp jump in home purchases, we already see that buyers are turning to rent, which increases overall demand. In this saturated market, baby boomers now make up a significant proportion of tenants. “With high demand and seniors who have the ability and flexibility to pay higher prices, millennials are at risk of being thrown out of the rental market,” Le Inman said in a follow-up email.
Impact on home ownership
While there is a subset of people who want to rent, there is another group that is hesitant to sell.
Earlier this month, Insider reported that aging boomers fueling the 2021 housing crisis because many do not list their houses to reduce living space, to relocate to their families, or to relocate to nursing homes, as would typical older generations.
The rollback is partly due to seniors refraining from listing as a precautionary measure against COVID-19, according to the report. Some also wait until the market cools down before starting a listing due to concerns that it will be too difficult to find a replacement for the home.
According to The newspaper “New York Times analysis of Mikhail KolomatskyBoomers currently account for 44.1 percent of real estate wealth, Gen X 31.2 percent, and Millennials 11.2 percent.
The generation gap is more evident than ever during the height of this inventory crisis. According to National Association of Realtors (NAR) reportThe United States lacked approximately 5.5 million new units from 2001 to 2020 compared to 1968 to 2000.
“This is the most important factor affecting the housing market right now,” Gay Cororaton, senior economist at NAR, told Inman last month.
“In 2029, the youngest baby boomers will turn 65 and the oldest 83. As the tails of this generation retire, some of them will sell their homes, and if they don’t, they will eventually sell their estates, ”wrote Kolomatsky. “But unless a lot more homes are built and quickly, the younger generation will simply have to wait for their share of the real estate wealth.”
From 2001 to 2020, an average of 1.225 million new housing units were built, compared with an annual average of 1.5 million between 1968 and 2000. Builders will have to build more than 2 million new housing units each year over the next decade to bridge the 5.5 million housing gap.