Although a silver tsunami of baby boomers might not provide much needed housing inventory as many once predicted, their offspring look set to become far wealthier from their decisions, according to Freddie Mac.
Among current homeowners between ages 60 and 78, three-quarters are planning to bequeath their properties or the proceeds of the sales to their children upon their death. With over half of the nation’s home equity belonging to the baby boomer generation, the amount set to pass to their descendants currently stands at $17.3 trillion in property value alone.
Boomers’ plans were similar across racial and gender lines, and trends in the research should provide planning lessons for future generations, Freddie Mac said.
“The value we see placed on homeownership and its contribution to the long-term financial success of American families underscores the importance of our mission to make home possible for more families across the country,” said Sonu Mittal, senior vice president and head of single-family acquisitions at Freddie Mac, in a press release.
“As the youngest baby boomers turn 60 this year, this research provides an opportunity to learn from a generation that has weathered multiple economic cycles and pivotal moments in recent history.”
Freddie Mac’s survey found over four-fifths, or 83%, of the baby boomer generation credited fixed-rate mortgages for allowing them to build wealth over time, and half now own their home mortgage free. Of the remainder still making monthly mortgage payments, 53% have an interest rate below 4%.
The rapid acceleration of household wealth among boomers — $19 trillion – in the last five years has provided older populations with more financial means to age in place. Of that amount, approximately half came from home equity appreciation.
At the same time, higher interest rates — now closer to 7% — could also be deterring some from relocating, with the much talked-about lock-in effect providing little motivation for older generations to move.
A 68% share of boomers said they would prefer to stay in their homes, close to the levels Freddie Mac has observed since it started tracking the generation’s household planning eight years ago. In 2021, a 69% share said they planned to age in place, and in 2016, the number was 66%.
If trends hold, they would mark a turnaround from various forecasts of a few years ago that older generations would contribute to housing supply growth over the next decade by placing their homes for sale. Freddie Mac’s findings, though, echo more recent 2024 data coming out of the Mortgage Bankers Association.
Currently, 65 million baby boomers reside in the U.S., making up 20% of the population.
“Clearly the baby boomer generation has benefited from our country’s unique housing finance system, and it is imperative that we ensure this system remains in place to help boomers and the many generations that follow,” Mittal said.
While representing a boon to families possessing generational wealth, the passing of homeownership within families highlights the difficulties of opening up a purchase market that is struggling with limited affordability and inventory. An estimated shortage of between three to seven million units for sale over the past several years means limited options for first-time buyers will remain a challenge in the near term to narrow homeownership and wealth gaps.
Most boomers are not relying exclusively on home equity for retirement, with 91% also having savings, Social Security, retirement and investment accounts and pensions available to draw from.
Among the set of baby boomers with plans to relocate, two-thirds intend to downsize, Freddie Mac’s survey showed. Nine out of 10 within the set currently reside in homes with three bedrooms or more.
