If you thought millennials were shaking up the real estate scene, get ready to meet Gen Z—the new kids on the block who are eyeing those classic boomer houses with a twinkle in their eyes.
The real estate landscape is undergoing a generational shift, and it’s time for baby boomers to brace themselves for the wave of Gen Z buyers entering the housing market. As millennials continue to make strides in homeownership, the next generation is quickly following suit, bringing fresh perspectives and preferences that are reshaping the way homes are bought and sold.
What’s going down with the boomer housing scene?
One generation dominates the US home market: the baby boomers.
Having amassed an astonishing $19 trillion in real estate, accounting for 41.6% of the nation’s real estate wealth, baby boomers have significantly altered the housing market and raised prices to previously unheard-of levels.
The number of people who are 80 years of age or older is predicted by the Census Bureau to more than double by 2040. Additionally, a potential “silver tsunami” of available homes might flood the market as boomers abandon their homes for a variety of reasons.
According to some analysts, this migration may result in cheaper pricing and more opportunities for future generations, especially Gen Z.
Around 2030, Gen Z, who will soon be entering their peak home-buying years, may benefit from this shift in the market. Since many baby boomers are downsizing as they become older, there may be an excess of starter houses, which are in high demand but hard to come by in the current market.
Millennials could have certain advantages, but they’re probably far older than most first-time homebuyers. Their prospects may be hampered by the necessity for significant renovations to ageing boomer homes and economic difficulties.
The one thing that can be predicted with confidence, notwithstanding efforts to predict market movements, is population trends.
That being said, according to historical data, baby boomers are expected to start moving out of their houses around 2030.
The winner takes it all
Millennials had to contend with tough economic times and fierce competition from baby boomers; Gen Zers, on the other hand, have a more advantageous market. A smaller cohort size and less competition from boomers may lessen the pressure on the home market.
Based on a Redfin estimate, as of 2022, 79% of baby boomers owned the homes in which they resided, compared to 52% of millennials and over 26% of adult Gen Zers.
According to Jessica Lautz, Vice President of Research and Deputy Chief Economist at the National Association of Realtors, “I don’t know that millennials will be that generation who benefits” from the retirement of boomers, she told Insider.
Redfin stated that 30% of 25-year-olds owned their home in 2022, compared to 27% of Gen Xers at the same stage in their lives.
In the meantime, millennials were still having difficulty keeping up with their parents. As reported by Redfin, 62% of 40-year-olds were homeowners in 2022, compared to 69% of boomers in the same age group.
Odeta Kushi, the Deputy Chief Economist for First American, a title business, told the outlet that in 2030, the oldest Gen Zers will be in their 30s, which is during the best years for first-time purchasers.
The possible advantages for Gen Z in terms of supply and demand dynamics are obvious, despite some conjecturing that the houses left behind by boomers could require renovations to appeal to younger purchasers.
Demographic forecasts suggest that when the younger generations take over, things will get better for Gen Z and eventually Gen Alpha.
Final notes
A major generational transition is occurring in the real estate industry, with Gen Z becoming the next wave of buyers. Sellers and real estate agents need to comprehend and adjust to the distinct tastes of this tech-savvy, ecologically sensitive, and community-focused generation as they set their sights on boomer properties.
In addition to drawing in Gen Z purchasers, embracing these changes and coming up with creative marketing and renovation strategies for older homes will revitalise the real estate industry. It’s time for baby boomers to welcome Gen Z into the areas they’ve lived in for decades as part of the ongoing intergenerational exchange.
The shift in the housing market may not be a solution for the larger housing crisis, but it does offer a special chance for the well-off and savvy younger members of the millennial age.
(Tashia Bernardus)