Yahoo Finance Why Boomers Are Expected To Sell Their Homes in These 5 Cities
A lack of available homes has been one of the drivers of high real estate prices in major metropolitan areas. Construction delays and supply chain issues during the pandemic contributed to an already-low home inventory, which Realtor.com noted was a result of “more than a decade of underbuilding relative to population growth,” as previously reported by GOBankingRates.com.
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Some experts are also blaming Baby Boomers, the generation born between 1946 and 1964, for contributing to the lack of home inventory. Realtor.com economic research analyst Hannah Jones previously told GOBankingRates that more than half of homeowners ages 60+ feel emotionally or financially locked into their home, according to a Fannie Mae survey.
However, experts also predict the situation could improve, with 9 million Boomer-owned homes expected to reach the market by 2035. Deemed a “silver tsunami,” when this occurs home prices may fall. And, in fact, Zillow identified five U.S. cities where boomers are already starting to sell their homes.
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Rate Lock-in Leads to Limited Choices for Buyers and Sellers
Recent research from Zillow showed that many homeowners across demographics suffer from “rate lock-in,” which means they could not get an interest rate as low as they have today if they were to sell and buy a new home. Add in the higher cost of homes right now, and it doesn’t make financial sense for someone with a low interest rate on their mortgage to sell.
Only 17% of Boomers are not experiencing rate lock-in – and that’s the highest percentage of any demographic. Additionally, a separate Redfin report found that 54% of Boomers are mortgage-free, which means they could sell their home and, presumably, purchase a smaller home with cash to avoid today’s high mortgage rates.
Top Cities Where Boomers May Sell Their Homes Soon
The Zillow survey identified five major U.S. cities with the smallest percentage of rate-locked boomers, offering a higher likelihood they might sell their homes soon. Many of these cities are in regions ranked most affordable, particularly the Midwest, by reports from multiple sources, including U.S. News & World Report.
Beyond affordability, however, these cities may not offer a high quality of life for seniors. They do not have the year-round warm climate that draws most retirees to the South and Southwest U.S. Most are not walkable cities, instead, requiring cars for transportation.
While these cities may have job opportunities and easier commutes than industry hubs like Austin and Dallas, the climate alone, which can include snowy winters, may be pushing boomers away.
A report from the Wall Street Journal showed that boomers are retiring to Appalachian states in the southern U.S., including Alabama, Georgia, Tennessee, the Virginias, and the Carolinas. These states offer a temperate climate with a lower cost of living than most Florida cities.
Top 6 U.S. Cities Set to Attract Millennials
So, which cities may attract millennials with available homes as Boomers relocate?
Zillow identified the following five cities with the smallest amount of rate-locked boomers, indicating good opportunities for millennials to snag a home at a potentially affordable price.
Metro | Share not rate locked |
Pittsburgh, PA | 38% |
Buffalo, NY | 32% |
Cleveland, OH | 29% |
Oklahoma City, OK | 29% |
Hartford, CT | 28% |
Nikki Buckelew, a certified senior housing professional with Buckelew Realty Group used Oklahoma City as an example of trends in these five metros. “The cost of living here in Oklahoma is comparably lower than other large metro areas. Young families and even singles can purchase a home or condo for a reasonable price and begin creating personal wealth, versus renting,” she said. “Even if they have to buy further out than the metro, the commute is easy from all directions.”
She pointed out another benefit to working professionals in these smaller cities. “If you have ever been to Austin or Dallas, or other big cities, you know the traffic is horrible. A short commute can be hours. In Oklahoma City, you can get virtually anywhere you need to go in 20 minutes or less – even during drive time traffic,” she said.
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Finally, she pointed out a few more benefits of Oklahoma City and other Midwest cities for millennials looking to raise families – selling points that may not necessarily matter to retirees. “People are friendly, homes are well constructed, and you get more yard space with your home than in most big cities,” she said.
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This article originally appeared on GOBankingRates.com: Why Boomers Are Expected To Sell Their Homes in These 5 Cities
