As a real estate company, it is important for us to stay informed about the trends and patterns in the housing market. Check out this video for a short but in-depth analysis of the adult population distribution and homeownership versus inventory level, and how it impacts the housing market.
Let’s start by breaking down the different generations in the adult population:
- Boomers: Individuals who are 55 years or older
- Gen-Xers: Individuals who are between 40 and 54 years of age
- Millennials: Individuals who are between 25 and 39 years of age
- Gen-Zers: Individuals who are 24 years or younger (for this analysis, we’ll keep this generation aside as they are still living with their parents)
Boomers: America’s Wealthiest Generation
Boomers have the greatest wealth in America and some of them actually own multiple homes. Due to their financial stability, they are living longer and don’t have to sell or move. Moreover, they have low mortgage rates and they can stay in their homes as long as they need to.
Gen Xers: Upgrading their Homes
Gen Xers are becoming financially stable and were the drivers behind the increased housing prices in the Bay Area in the past 10 years. They are beginning to own multiple properties, just like the Boomers. They are now looking for larger homes with more square footage, bedrooms, and are financially stable enough to do so.
Millennials: Entering the Housing Market
Millennials are becoming of age to become homeowners. Historically, adults in the U.S started to buy a home around the age of 32, and this generation is no different. In 2020, the largest number of adults in the U.S turned 32, and this trend will peak in 2025. This, combined with the lack of construction from builders, has caused a shortage of inventory in the housing market.
Competition for Boomer’s Inventory
With Boomers living longer and not transitioning into their next lifestyle, the shortage of inventory is becoming a bigger problem. Gen Xers and Millennials are competing with each other for homes that are owned by the Baby Boomers. This is causing multiple offers and overbidding, just as we saw in the beginning of 2022.
