Millennials Aren't Having Kids. Here's Why It's a Problem For Boomers.


You’ve heard and seen the mother that pesters her child about giving her a grandbaby. Maybe it’s even you! Some women, and even men, become impatient once their children are grown, as the natural next step seems to be having a grandchild running around. Unfortunately, a lot of us may be left waiting for a while. Why? Millennials – and a lot of baby boomers’ children fall into this generation - are postponing parenthood until later in life compared to their parents. The birthrate has hit a record low in the United States and the only age group that has seen an increase in first time births is the 40-44 years old category.

This trend, possibly a result of economic insecurities among other things, could pose a big problem for some boomers regarding their retirement plans, says Forbes contributor Joseph Coughlin.

The majority of boomers’ wealth is in their homes, not in their bank accounts. Many people’s retirement plans hinge on selling their homes - they need to pull the cash out and use it. Just because millennials are putting off having a family, doesn't mean they aren't buying homes. They just aren't buying boomers' homes. And herein lies the problem. Trying to sell larger, family-sized homes in older suburban neighborhoods, built for the needs of previous generations, may prove to be quite difficult. Millennials don't yet need, want or can afford all that house. With the pool of young, new families shrinking (and the average family size shrinking), so does the chances of selling a big family-sized house. Especially for the price desired to properly fund the costs of living during retirement.

This problem will get worse before it gets better. Boomers collectively own more than 30 million homes, worth more than $12 trillion! As you’ve probably heard, two out of every five homeowners are boomers. A study by Fannie Mae estimates that 13-14 million boomers will plan to end their home ownership status between 2026-2036. Some of these homes will be left to children or grandchildren but many will be listed for sale. As mentioned, younger home buyers aren’t looking for big and outdated homes, which is why homes built before 2010 are selling well below asking price. Twice as Many People Prefer New Homes Over Existing Homes, as per Trulia.com. 

This massive, unprecedented sell off of houses by boomers starting in 2026 will be “negative for the home sales market,” according to the study. As boomers put their properties up for sale on the market, supply will rise, decreasing demand, and decreasing prices. When the dust on this “crisis” settles, it will likely be the millennials who are celebrating with cheaper homes as boomers are forced to sell their homes at lower prices.




Comments

Be the first to commment on this article.

Post a Comment