Published by REALTOR.com | November 25, 2024
Baby boomers own 38% of the U.S. real estate and have record-high home equity. Is it time to cash out or stay put?
Baby boomers hold a major advantage in the housing market, even as younger generations struggle to get their foot in the door.
Right now, adults aged 60 to 78 own around 38% of the real estate in the U.S., yet they make up just a quarter of the population. About half of all boomers own their homes outright and enjoy unprecedented home equity.
In the second quarter of 2024, homeowner equity reached 72.7% of total real estate value, the highest since 1958.
Baby boomers might be eyeing that nest egg and wondering: Is now the time to sell?
For many boomers, cashing out while it’s still a seller’s market holds undeniable appeal. Downsizing to a smaller property or relocating to a more affordable area could free up significant cash, fueling retirement plans or long-planned adventures.
But before putting up that “For Sale” sign, it’s essential to weigh the trade-offs—especially if you’re planning to buy again in a high-priced market or face ballooning rental costs.
How boomers built their real estate portfolio
Many boomers bought their homes when “interest rates were higher, but the houses were still affordable,” Newton, MA, developer Cindy Stumpo says. “So you’re paying a higher interest rate for sure, but you were also paying less money for the house.”
Although mortgage rates in the 1980s soared as high as 13.74%, the much lower cost of homes meant boomers could build significant equity over time. For example, the average price of a home then was $73,400. When adjusted for inflation, that’s around $298,000.
Compare that with today’s national median home price of $424,950, and it’s clear why boomers believe they got the better end of the deal.
“Most boomers are likely not still in their first home, but if they were, the typical home is worth roughly five times what it was when they purchased,” says Realtor.com® senior economic research analyst Hannah Jones.
To sell or not to sell
According to a 2024 survey by Clever Real Estate, more than half of boomers (54%) say they have no plans to sell their homes, which has created a housing shortage and put a strain on the housing market for other generations.
With interest rates hovering below 7%, many boomers have little incentive to enter the market. Along with rising home costs, they’ve also gotten smaller. The price per square foot for a home in 1980 was $41. Today, it’s $226.
“It used to be, you sold your house and downsized, but you didn’t spend the same amount of money on the smaller property,” Stumpo says. “Everybody is sitting on these houses today worth a million dollars or more. There’s a lot of profit in the house. They’d love to sell it, but where are they going?”
