Children of baby boomers could be in for a major windfall in the coming years: $17 trillion worth of home equity. And that could change the way houses are bought, and who is buying them.
A new survey from mortgage giant Freddie Mac found that 75% of homeowners between the ages of 60 and 78 plan on leaving their home or the proceeds from the sale of that home as inheritance for their children or other family members.
That translates to about 50% of the home equity available in the United States, totaling more than $17 trillion. If absorbed by younger generations, that could compound shifts in the housing market that are already starting to materialize.
The findings come at a time when younger homebuyers are facing challenges created by a lack of housing affordability and supply throughout the country. For first-time buyers especially, there are serious barriers to homeownership.
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Recent data from the National Association of Realtors showed that between the summer of 2023 and the summer of 2024, the share of first-time homebuyers in the market dropped to the lowest level on record. At the same time, the median age of first-time homebuyers hit 38, another all-time high.
But economists have pointed out that for those buyers who are able to enter the market right now, family wealth and inheritance are major factors.
“The bank of mom and dad is very popular for first-time homebuyers to pull from,” Jessica Lautz, deputy chief economist at the NAR, said during a presentation last week. “What we actually saw as an all-time high this year is inheritance”
All told, 25% of first-time buyers used a gift or loan from a relative or friend for their down payment while 7% used inheritance to either make a downpayment or purchase their house in cash.
'Silver tsunami?' More like a trickle
Freddie Mac’s findings also signal the potential for an unexpected trend in housing supply, researchers said.
Some housing professionals had previously predicted that as the baby boomer generation aged, they would move out of their houses, freeing up an abundance of housing for younger people. For example, last year, Meredith Whitney – known for predicting the 2008 financial crisis – told Yahoo Finance that she anticipated a “silver tsunami” in the coming years.
Whitney had forecast that starting toward the end of this year, aging homeowners would be looking to downsize, opening up housing opportunities for younger buyers.
But that has yet to happen – and data from both Freddie Mac and the NAR data suggests that the tsunami may be more of a tide or trickle.
“Perhaps not the silver tsunami that we thought would happen, this generational transfer of wealth,” Lautz said. “But we are seeing a trickle into today’s real estate market of this transfer of wealth to young adults.”
Freddie Mac’s data added to that, revealing that a majority of baby boomer homeowners intend to age in place rather than downsize as they age.
It doesn’t necessarily mean that inventory won’t be freed up in other ways. On Thursday, data from the NAR showed that in the 12 months ended in November, housing supply has increased 18%. And homeowners will eventually have to move, according to the industry group’s chief economist, Lawrence Yun.
“Life-changing events, death in the family, maybe a newborn child. People need to trade up,” he said during a presentation last week. “We are beginning to see more supply coming onto the market.”