Housing analysts are eager to see whether members of the baby boomer generation that are approaching retirement will have significant impact on the market. As millennials continue to push off homeownership, boomers could represent a new demographic that has been underserved by recent building trends.
Unfortunately, new reports by Fannie Mae show that members of this demographic are not eager to find a new home. The report released by Fannie Mae this week found that the percentage of baby boomers living in single-family detached homes has remained stable from 2006 to 2012, showing that this generation has little interest in downsizing to a unit in a multi-family house or condo.
However, Fannie Mae argues that this trend may not remain long. “The stability in single-family detached occupancy among Baby Boomers will eventually come to an end, if not by boomers’ choice, then as a consequence of advancing age or mortality that would make it difficult or impossible to maintain a single-family home,” their report read.
Boomers currently face many challenges if they do decide to relocate. Since, 2006, HousingWire reports that the average value of an owner-occupied single family detached homes has fallen 13 percent. Many homeowners in this age group currently have negative equity on their home loans, making a move unlikely.
If boomers still decide that they want to sell their homes, they also face a lack of qualified buyers, according to the source. Between 2006 and 2012, the percent of boomer householders who moved during the preceding year dropped from 10.2 percent to 7.9 percent, pointing to a trend where boomers are both resistant to moving and face limited purchasing options.
With so many boomers currently holding mortgages that are underwater, lenders should be aware of the risks when this age group decides to relocate. For this reason, lenders should protect themselves by using credit risk management software to determine which applicants can be expected to make timely payments.
