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Empty-nest baby boomers own 28% of the nation’s large homes, while millennials with kids own just 14%. The landscape has transformed over the last decade: 10 years ago, young families were just as likely as empty nesters to own large homes

Empty-nest baby boomers own nearly 3 in 10 (28.2%) large U.S. homes. That’s twice as many as millennials with kids, who own just 14.2% of the country’s large homes, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Gen Zers with kids own almost none (0.3%) of them.

An additional 7.5% of the country’s large homes are owned by baby boomers with households of three adults or more; this category likely consists mostly of adult children living with their boomer parents.

The report is based on a Redfin analysis of U.S. Census data from 2022 that breaks down the share of three-bedroom-plus homes owned and occupied by each generation, by household type and size. For the purposes of this report, Redfin used the term “empty nesters” to refer to households headed by baby boomers with 1-2 adults living in the home. See the report for full details on methodology.

It’s worth noting that even though millennials with kids own half as many large homes as empty nesters, there are more millennials than baby boomers. Millennials make up roughly 28% of the country’s adult population, the largest share of any generation. They’re followed by baby boomers (27%), Gen Xers (25%) and Gen Zers (12%).

Baby boomers own an outsized share of large homes for several reasons, current and historical:

  • There’s not much financial incentive to let go of large homes. Most (54%) boomers who own homes have no mortgage. For that group, the median monthly cost of owning a home, which includes insurance and property taxes, among other costs, is just $612. For the boomers who do have a mortgage, nearly all have a much lower interest rate than they would if they sold and bought a different home with today’s near-7% rates: Even if they downsized, they may have a nearly identical monthly payment.
  • For millennials and Gen Zers, it’s harder to find and afford a home. Large homes are in short supply, largely due to the mortgage-rate lock-in effect and a recent lack of homebuilding. Large homes are also hard to afford: 2023 was the least affordable homebuying year on record; it was especially hard for younger Americans who don’t have equity from a prior home.
  • Some young Americans don’t want to own a home. A recent Redfin survey found that 12% of millennials who believe they’ll never own a home aren’t interested in homeownership, and 7% said they don’t plan to buy because they don’t want to maintain a home.
  • Boomers built wealth. Many older Americans benefited from an abundance of newly built homes and favorable economic conditions during their prime moneymaking years, during the 1990s economic boom. Those homes proved to be good investments: Home values have grown four times faster than incomes over the last several decades. Today, boomers hold half of the wealth in the U.S., and much of it is in real estate.
  • Boomers are older, so they’ve had more time to buy homes.

“There’s unlikely to be a flood of large homes hitting the market anytime soon,” said Redfin Senior Economist Sheharyar Bokhari. “Logically, empty nesters are the most likely group to sell big homes and downsize: They no longer have children living at home and don’t need as much space. The problem for younger families who wish their parents’ generation would list their big homes: Boomers don’t have much motivation to sell, financially or otherwise. They typically have low housing costs, and the bulk of boomers are only in their 60s, still young enough that they can take care of themselves and their home without help. Still, some boomers are ready to downsize into a condo or move somewhere new for retirement, and the mortgage-rate lock-in effect is starting to ease–so even though there won’t be a flood of inventory, there will be a trickle.”

Many young families are renting large homes in the meantime. Millennials with kids take up one-quarter (24.8%) of the three-bedroom-plus rentals in the U.S., the largest share of any generational category, followed by millennials without kids (11.6%). Empty-nest baby boomers take up the next-highest-share (11.4%) of three-bedroom-plus rentals.

45% of empty nesters own big homes, almost double the share of millennials with kids

The above addresses the share of large homes owned by each generation and household type. In looking at the share of each generation and household type that owns large homes, Redfin found that empty-nest baby boomers are almost twice as likely as millennial families to own three-bedroom-plus homes. Nearly half (45.5%) of one-to-two-person boomer households own large homes while just over one-quarter (27%) of households consisting of millennials with kids own large homes. Roughly 3% of Gen Zers with kids own them.

What type of home do the rest of millennials with kids live in?

Some young families rent large homes: Roughly 1 in 10 (9.3%) millennial-with-kid households live in three-bedroom-plus rentals. Others rent smaller units.

Other millennials live with family or roommates. Of all U.S. millennials (whether they have kids or not), roughly 17% of them live with a family member in a home that family member owns or rents–most likely their parents. Another 10% live in a home owned or rented by someone they’re not related to–most likely a roommate. Seven in 10 are the head of their own household, whether they’re owning or renting.

Older Americans own a much bigger share of large homes than they did 10 years ago, and young families own a smaller share

Who owns large homes has changed over the last decade. In 2012, empty nesters of the silent generation (who were 67-84 at the time) took up 16% of three-bedroom-plus homes. That’s a smaller share than Gen Xers (who were 32-47 at the time) with kids, who took up 19% of those large homes.

But one thing has remained the same over time: Baby boomers with no kids living at home take up the lion’s share of big houses. In 2012, empty-nest boomers (who were then 48-66) owned and occupied 26.4% of three-bedroom-plus homes in the U.S., comparable to today’s share.

Empty nesters take up at least 20% of large homes everywhere in the U.S.

Empty-nest baby boomers take up the biggest share of large homes in relatively affordable Rust Belt and southern metros. Baby boomers with one or two people in the household take up roughly one-third of three-bedroom-plus homes in Pittsburgh, PA (32.1%), Birmingham, AL (31.1%) and Cleveland, OH (30.8%), the highest shares in the nation. Next come Buffalo, NY (30.5%) and Virginia Beach, VA (30.4%). Demographics are one reason why Pittsburgh tops this list; the metro skews older: Baby boomers make up 40% of Pittsburgh’s households, a far higher share than Gen Xers (27%) or millennials (20%).

Empty nesters own at least 20% of large homes everywhere in the country. They take up the smallest share of three-bedroom-plus homes in popular migration destinations and California metros: Riverside, CA (21.9%), Salt Lake City, UT (22%), Austin, TX (22.2%), Houston (23.2%) and San Jose, CA (23.7%).

No matter the metro, millennials with kids take up no more than 18% of three-bedroom-plus homes

Young families take up the smallest share of large homes in coastal California and Florida, where large homes tend to be more expensive, and the largest share in relatively affordable inland metros.

Just about one of every 10 three-bedroom-plus homes are owned and occupied by millennials with kids in Los Angeles (9.4%), San Jose, CA (10.4%), San Francisco (10.9%), Miami (11.2%) and New York (11.8%) Millennials with kids have the largest share in Indianapolis, IN (17.6%), Minneapolis (17.4%), Cincinnati, OH (17%), Kansas City, MO (16.5%) and Riverside, CA (16.5%).

To view the full report, including, charts and metro-level data, please visit: https://www.redfin.com/news/empty-nesters-own-large-homes

 

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Rising supply has led to rising vacancies, motivating landlords to lower asking rents, which fell 1% from a year earlier.

The median U.S. asking rent fell 0.8% year over year in December to $1,964, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the third consecutive decline, following a 2.1% annual drop in November—which was the largest since 2020—and a 0.3% dip in October.

December rents were little changed from the prior month (-0.2%).

The rental market has lost steam largely due to a jump in supply fueled by a building boom in recent years. That has left many landlords struggling to fill vacancies, motivating some of them to drop asking rents. Some landlords are also offering one-time concessions like a free month’s rent or reduced parking costs to attract renters. This means the prices renters are paying in total are likely coming down faster than they appear to be in the data.

Other reasons rents have cooled include economic uncertainty, slowing household formation, and affordability challenges, as rents are still only 4.4% below their record high. Additionally, there are new signs that the economy is slowing; Americans are starting to tighten their belts, which could be contributing to the decline in rents.

“High supply—more so than low demand—is driving rent declines. But if mortgage rates continue to drop at a fast clip in 2024, slowing rental demand could become a major driver of rent declines,” said Redfin Economics Research Lead Chen Zhao. “That’s because more Americans would ditch the rental market to become homeowners, leaving landlords with even more vacancies.”

There are more newly built and under-construction apartments in the U.S. than there were a year ago; the number of completed apartments is near the highest level in more than 30 years, and the number under construction is just shy of its record high.

Because renters have an increasing number of buildings to choose from, vacancies have climbed. The rental vacancy rate rose to 6.6% in the third quarter—the most recent period for which data is available—the highest level since the first quarter of 2021.

Rents Rise in the Midwest and Northeast, Fall in the West and South

The median asking rent in the Midwest rose 3.7% year over year to $1,434. Rents also rose in the Northeast, climbing 1.7% to $2,439. Meanwhile, rents fell 1% year over year to $1,632 in the South, and declined 0.6% to $2,346 in the West.

Rents are likely holding up best in the Midwest and Northeast because those regions haven’t been building as much as the South and West, meaning some landlords have less incentive to drop prices because they’re not dealing with as many vacancies.

“With rents falling and vacancies rising, now is a good time to shop around or try to renegotiate your rent if your lease is up—especially if you’re a renter in the South or West,” Zhao said.

To view the full report, including charts and methodology, please visit:
https://www.redfin.com/news/redfin-rental-report-december-2023

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