Baby Boomers Dominate Housing Market with Cash Buys
Baby boomers, armed with substantial wealth, are reshaping the housing market dynamics by leveraging their $75 trillion nest egg. Initially content with staying put during the pandemic, recent research from the National Association of Realtors reveals that 39% of current home buyers are boomers.
These boomers, especially in the age range of 58 to 76, are increasingly opting for all-cash home purchases to navigate high mortgage rates, dominating the housing market and outpacing cash-poor buyers. Redfin notes a significant increase in all-cash home purchases, constituting 34.1% of US home acquisitions in September, the highest rate since 2014, signaling a notable advantage for wealthier Americans, particularly the affluent boomer generation.
With about half of the total US net worth, boomers possess significant real estate wealth, surpassing their holdings in pensions and closely trailing their stock investments. This wealth leverage impacts the housing market, diminishing opportunities for first-time homebuyers and boosting the prominence of repeat buyers, typically in the boomer age bracket. Consequently, millennials, grappling with financial constraints and high-interest rates, are experiencing a decline in home purchases and are entering the market at older ages, hampering their ability to build equity and grow their net worth.
Despite potential market shifts, boomers, unfazed by interest rates, perceive the current housing landscape as an opportune moment to invest and augment their wealth, envisioning potential future gains as the market dynamics fluctuate in their favor.