Baby Boomer Parents Assisting Offspring to Buy Homes

A recent article with data primarily from California can be applied to many other areas of the country. Many of these baby boomer homes are residences for offspring who either can’t afford or more likely do not want to buy a home. There is definitely a difference in attitude between generations regarding home ownership. The children of baby boomers place a higher value on mobility and cash for travel and fun.
Another factor is the trend toward smaller families. This generation seems to be favoring only one or two children, negating the need for larger homes. Many boomers are living in their retirement fund, as they owned homes prior to the real estate crash and just held on. Now the value of those homes is increasing and approaching pre-crash levels. They still value home ownership and want to see their children living in homes they own.
The problem is in the unusually low inventory and rising price market we’re in these days. Cash investor buyers have been scooping up homes at a rapid clip. This has kept an upward bias on prices, and the younger buyers can’t find enough in the way of inventory. Even if they can find a home they like and it has an affordable list price, they usually end up in a bid competition for it. Many aren’t even offering, as they can’t afford the down payment or they have credit issues.
In the value-rich California market, many baby boomers are in a position to help their offspring with part of their equity through a HELOC or other loan. However, in other parts of the country there are still a great many boomers underwater in their mortgages. They aren’t in a position to help, but they still believe in the American Dream. Should values continue to rise, more boomers will probably gift down payment money to their children.
Even when the media and studies show that in all areas right now it’s less expensive to own than to rent, younger Americans aren’t buying the dream. Low inventories, credit problems, no down payments, and just a general lack of desire to own a home are all contributing factors to a market still too dependent on cash investor and institutional purchases. We may be a “nation of renters” for a while yet.