BAM Key Details:

  • A new report from Redfin on homeownership shows empty nesters own twice as many large homes as millennials with children. 
  • The likelihood that empty nesters will want to downsize to lower-maintenance homes in the near future presents an opportunity for agents to match-make, as Byron Lazine pointed out this week on the Hot Sheet. 

Given the abysmal state of housing affordability in 2023, it’s not surprising that millennials and Gen Z both found it more difficult to buy homes—let alone upgrade to larger ones. Millennials with growing families felt that extra cost keenly while boomers generally felt it less. 

According to a new report from Redfin, empty-nest baby boomers own twice the number of large homes as millennials with children, mainly because this demographic tends to have more equity to use, compared to younger generations, when shopping for their next home. 

Turns out, that’s not all bad news for Gen Y and Gen Z. 

In fact, as Byron Lazine pointed out on Tuesday’s Hot Sheet, the comparatively large share of boomer empty nesters in large homes presents a unique opportunity for real estate agents. 

Empty-nest boomers own twice as many homes as millennials with children

Boomers with empty nests (i.e., those with households of 1-2 adults and no minor children) own close to 3 in 10 (28.2%) large U.S. homes—about twice as many as millennials with children (14.2%). 

Baby boomers with households of 3+ adults (most often adult children living with their boomer parents) own 7.5% of large U.S. homes. 

Gen Zers with kids own the smallest share at just 0.3%. 

Redfin-Empty-nesters-own-twice-as-many-large-homes-as-millennials-with-kids

Source: Redfin

The data shown here is based on Redfin’s analysis of U.S. Census data from 2022, which is the most recent year for which this data is available. 

For clarity’s sake, the data breaks down the share of large U.S. homes (three-plus bedrooms) owned and occupied by each generation, subdivided by household type and size. 

Redfin’s analysis described three different household types: 

  1. 1–2 adults living in the home with no minor children; among boomers, these households were classified as “empty nesters.”
  2. 3+ total adults living in the home with no minor children
  3. Households where adults living with their minor children

Age ranges for each generation In 2022: 

  • Adult Gen Zers: 19-25 years old
  • Millennials: 26–41
  • Gen Xers: 42–57
  • Baby boomers: 58–76

At 28%, millennials account for the largest share of the U.S. population, followed by— 

  • Boomers (27%)
  • Gen Xers (25%)
  • Gen Zers (12%)

Reasons for empty nesters’ outsized share of large homes

Compared to millennials with children, who generally need large homes more than empty nesters, boomer empty nesters are significantly more likely to own a larger home. 

Here are the main reasons: 

  1. Boomers haven’t had much financial incentive to sell their large homes. Most (54%) have no mortgage; they own their homes free and clear. So, the median monthly cost of homeownership for this group—including insurance, property taxes, and other costs—is just $612. I mean, how many people would give that up without a comparable payoff?
  2. Boomers who do have mortgages are generally locked into much lower mortgage rates compared to today’s average. Even if they downsized, they may be looking at the same monthly housing costs. 
  3. It’s harder for millennials and Gen Zers to find and afford a home—let alone a large one, and those are in short supply. Between the lock-in effect, the housing shortage, and low affordability, younger generations are at a disadvantage when shopping for larger homes because, for one, they tend not to have the equity older generations have. 
  4. Some millennials and Gen Zers don’t want to own a home. According to a recent Redfin survey, more than one in ten millennials (12%) who believe they’ll never own a home aren’t even interested in homeownership, and 7% say they’re not planning to buy a home because they don’t want the hassle and cost of maintaining one. Some younger Americans prefer living in cities within easy walking distance of local hotspots like restaurants and theaters. And for most people, this lifestyle generally doesn’t come with large homes. 
  5. Boomers have built wealth. During their prime money-making years, many older homeowners had the benefit of more favorable economic conditions. The 1990s economic boom allowed many to build wealth and purchase large homes while at the height of their careers. Over the past several decades, home values have grown at four times the pace of household incomes, allowing these homes to build a substantial amount of equity. Consequently, boomers today hold half the wealth in the U.S..and much of that wealth is in real estate. Americans who bought their homes more than two decades ago spent a smaller share of their income on housing costs compared to today’s millennial and Gen Z homebuyers. 
  6. Speaking of the obvious, boomers are also older, which means they’ve had more time to buy homes. And many bought one with the expectation of a growing household. 

There’s unlikely to be a flood of large homes hitting the market anytime soon. 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.

Sheharyar Bokhari

Redfin Senior Economist

Looking at it from another angle, almost half of all 1–2 person boomer households (45.5%) in the U.S. own large homes, compared to a little over one-quarter of millennial households with children (27%) and about 3% of Gen Zers households with children. 

Millennials with children occupy the largest share of three-bedroom-plus rentals

Millennials with children account for about one-quarter (24.8%) of all rentals with three or more bedrooms in the U.S., making up the largest share of any generational group, followed by millennials without children (11.6%). 

Boomer empty-nesters account for the next largest share at 11.4%. 

Redfin senior economist Sheharyar Bokhari’s advice for young first-time buyers looking for relatively large homes is to consider new construction. Nearly all new builds have three bedrooms or more, and more have hit the market since builders are busy offloading surplus homes they started building when the pandemic homebuying boom ramped up buyer demand. 

Some of these builders are also offering concessions like mortgage rate buydowns, which reduce monthly housing costs for budget-conscious buyers. 

An opportunity to match-make

Even if boomers don’t have a real financial incentive to move, they may want to get out sooner rather than later for a variety of reasons: 

  • The possibility of a “silver tsunami” in the next few years
  • The opportunity to downsize into a lower-maintenance and (potentially) lower-cost home
  • A desire to live closer to children/grandchildren
  • A desire to live someplace warmer

Byron Lazine brought this up on Tuesday’s Hot Sheet, specifically addressing the opportunity for agents to bring together boomer empty-nesters with large homes and millennials with households that are outgrowing their current homes (if they haven’t already). 

If you’ve got 28% of…empty-nester boomers owning these large homes and only 14% of millennials with kids owning these large homes, there’s an opportunity to match-make there. There’s an opportunity to get one generation to get ahead of, maybe, a silver tsunami—or get ahead of a different type of market—and get that home into the millennial generation where they have a need for it.

This is the one I’ve been really trying to help agents understand because this is the opportunity. You want to create relationships in your community? Create them with the baby boomers. That’s your path, there, for listings over the next 5-10-15 years.

Byron Lazine

Right now, agents have the opportunity to help boomers—especially those living in that 28% of large U.S. homes—that they can take that home and essentially trade it in for something newer (i.e., lower-maintenance) in a downtown, walkable location. 

At the same time, you’ll be helping millennials and Gen Zers with children find affordable homes with more living space for their larger households. 

Read the full report for more information, including methodology and metro-level summaries.