Homeownership—what a topic! Boomers make up 21% of the U.S. population, yet they own 38% of the nation’s homes. And interestingly, more than half of them have no plans to sell. Grab a seat, this one’s definitely worth reading!
-The Editors

💰Money Watch:

Are Boomers Really Getting Rich Off Their Homes?

Housing costs have become a hot topic, with prices skyrocketing and affordable options dwindling. While some argue that baby boomers are sitting on a goldmine of home equity, the reality for many is far more nuanced.

The Reality of Homeownership Wealth

It’s true that homeownership has helped some build equity over time, but calling it "getting rich" oversimplifies the situation. Many boomers who purchased homes decades ago did so at high interest rates—some as steep as 14%—and scraped by to meet mortgage payments. For others, the rise in property values has led to an increase in taxes and insurance costs, leaving them "house poor."

As one homeowner pointed out, rising home prices often only benefit tax assessors and insurance companies. If boomers sell, they face inflated prices for their next home or prohibitive capital gains taxes, making downsizing less appealing.

The Role of Real Estate Investment

Much of the housing crisis isn't directly linked to boomers but to corporate real estate investment. Private equity firms and large corporations began snapping up properties after the 2008 housing crash, driving prices higher and creating stiff competition for individual buyers. This has pushed housing costs beyond reach for many, particularly younger generations.

Homeowners noted that developers are also part of the problem. Instead of building smaller, affordable homes, they often focus on oversized luxury houses that cater to wealthier buyers, leaving middle-income families and retirees without viable options.

Why Boomers Are Staying Put

For many boomers, selling their homes is not a practical solution. Some are reluctant to take on new mortgages at today’s rates, which are significantly higher than when they first purchased their homes. Others prefer to stay in communities they’ve lived in for decades or face logistical and emotional barriers to downsizing.

Additionally, the tax code complicates matters. Updating the capital gains exemption for inflation could encourage older homeowners to sell, freeing up housing stock for younger families.

The Real Cost of Aging in Place

While the notion of boomers cashing in on their homes is overblown, the financial strain of staying put is undeniable. Maintenance, rising costs of utilities, and unexpected medical expenses often eat into whatever wealth might be tied up in home equity.

For younger generations, the frustration is understandable. With wages stagnating and housing prices surging, the path to homeownership feels increasingly out of reach. But rather than placing blame solely on boomers, we need to examine systemic issues, including real estate speculation and a lack of affordable housing development.

A Way Forward

To truly address the housing crisis, we need more than finger-pointing. Policies that incentivize affordable housing development, limit corporate real estate speculation, and modernize the tax code could help unlock inventory and bring relief to those at all stages of life.

Boomers aren’t villains—they’re often navigating the same broken system as everyone else. And while their decisions impact the market, so too do broader economic and policy forces. Bridging the generational divide will require empathy and a shared commitment to meaningful change we can outsmart them.

Read more on this study here!

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📚Reader Question of the week:

Will Buying Our Son A Home Give Us A Grandchild?

Reader: My wife and I are in our mid-60s, and we’ve always dreamed of being grandparents. But our adult son has made it clear he doesn’t want children because of the financial burden. We’re considering buying him a home to ease his financial worries in the hopes that he might change his mind about having kids. Is this the right move, or could it backfire?

Over64: Thanks for writing in! Elon Musk, the billionaire entrepreneur and father of 12, has been outspoken about his views on having children, often highlighting how rewarding and fulfilling parenthood can be. Musk frequently shares that he has never met anyone who regretted having children, and in fact, he believes that people who have large families are often the most satisfied. Grandchildren give you all the benefit of being a parent without ever having to change a diaper- if you don’t want to!

You must realize the choice does not belong in your hands. While you can provide support and encouragement, it’s ultimately your son and his partner who must make the decision that’s right for them.

Providing your son with a home could certainly alleviate some of his financial burden. It might free up resources for other expenses, like saving for a child’s future or covering child care costs. However, there are a few caveats to keep in mind:

1. It’s Not a Guarantee: Even with reduced financial strain, your son’s decision about having kids may stem from other personal or emotional considerations. Offering a home may unintentionally put undue pressure on him to have children, which could strain your relationship.

2. Long-Term Financial Impact: Unless you’re purchasing the home outright, your son will still need to manage property taxes, insurance, and maintenance costs. If his concerns about affording kids extend beyond housing, this gesture may not fully address his hesitation.

3. Your Own Financial Stability: Many older adults are navigating the challenges of rising living costs and the need to save for retirement. It’s essential to ensure that your financial support for your son won’t compromise your long-term security.

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