Congrats, Your House Made You Rich. Now Sell It.

The key is beating the crowd. If boomers decided to sell en masse, the prices they would get would be a lot lower than what their home appears to be worth on paper today. Even if they can avoid it now, most are going to have to sell in the years ahead. That could put downward pressure on the prices of the types of homes they live in. Then it might not be a good time to sell anymore.

Ever since they began buying homes in the 1970s, boomers’ effect on the U.S. housing market has been profound. Because it was much more populous than the so-called silent generation that preceded it, the baby-boom generation — typically defined as those Americans born from 1946 to 1964 — drastically increased the country’s need for homes. Construction ramped up, suburbs spread and home prices rose. Many boomers didn’t stop with their first home, either, opting to move into ever larger, more expensive homes as their families, and wealth, grew. Helping the process along: Through much of their prime earnings years, mortgage rates went lower and lower.

In the years before the pandemic, this dynamic appeared to be shifting. An analysis from International Monetary Fund economist Marijn Bolhuis and Harvard University lecturer in economics Judd Cramer conducted just before Covid-19 hit, showed that the larger homes that many boomers owned, and for homes in neighborhoods with more boomers in them, price growth and sales were underperforming other types of homes.

Then everything changed. A newfound desire for living space among younger generations, sub 3% mortgages and the boost to household balance sheets from government relief pushed demand and prices for homes — particularly those in the suburbs — skyward. And even as the pandemic faded, those price gains stuck: As of August, the S&P CoreLogic Case-Shiller national home price index was 46% above its February 2020 level.

Time marches on, though, and the desire and ability of the Generation-X and millennial cohorts to ladder up into the homes the boomers will eventually vacate might be constrained.

The apparent preference many millennials, in particular, had for more urban lifestyles might have gone by the wayside. But they aren’t having as many children as boomers did, reducing the need for those extra bedrooms. Moreover, millennials and Gen Xers who are already homeowners typically still owe money on their homes at mortgage rates that are much lower than what is on offer today. Moving into a more expensive home and having to pay even more interest each month won’t work for them. Meanwhile, younger millennials and other first-time buyers are typically looking for less expensive, starter homes.

A boomer selling wave won’t happen all at once, though. People are healthier in their old age than they used to be, and relative to the generations that both preceded and succeeded them, boomer balance sheets are in good shape. Having spare bedrooms for when the grandchildren and the grandchildren’s parents come to visit ain’t a bad thing.

“They don’t feel the pressure to move at this point,” says Cramer.

The idea of “aging in place” is easy to like, but accomplishing it might not prove so easy. For some boomers, the reasons to sell, either for financial or health reasons, will come sooner rather than later. When that happens, they will need to not only find someone to buy their old house, they will need to find someplace to move into.

Jennifer Molinsky, who directs the Housing an Aging Society Program at Harvard’s Joint Center for Housing Studies, thinks there won’t be a “great senior selloff” in the housing market, but she worries about where aging boomers are going to live. Many people over 75 don’t have the financial wherewithal to move into assisted living, and the supply of age-appropriate homes is limited. Even now, rather than aging in place, many older boomers might be more accurately described as stuck in place. “Smaller, accessible stuff is hard to find,” she says.

Housing bottlenecks could ensue as more big homes come on the market, and the supply of smaller, accessible ones strains to meet demand. Boomers who are able to make the move now could be happier for it.