Baby boomers are a key constituency for the reverse mortgage industry since they are currently the generation with the largest share of the population at or above the age of 62. A recent SmartAsset analysis of 2023 Home Mortgage Disclosure Act (HMDA) pinpointed where boomers are most active within the U.S. housing market.
“Retirement often signals a major shift in a person’s life. Many retirees choose to downsize to a more manageable home or move to an affordable area to better stretch their fixed dollars,” the report explained. “Others simply want to enjoy a different lifestyle with their newfound free time. These shifts in dollars and demand can affect local economies — especially if they’re done en masse.”
The data shows that the top-five metro areas for baby boomer homebuyer activity are Raleigh, North Carolina; Nashville; Phoenix; Indianapolis; and Charlotte.
Jaclyn DeJohn, a certified financial planner and author of the report, told HousingWire’s Reverse Mortgage Daily (RMD) that the data is indicative of a major business opportunity, considering the wealth of this generation.
“The most recent U.S. Census Bureau data confirms that baby boomers have the highest net worth of all generations,” DeJohn said. “This means that baby boomers have the most economic power when it comes to housing markets, as sellers are more likely to accept offers where financing is least likely to fall through.”
This translates to flexibility for the cohort that they will take advantage of.
“Baby boomers have greater choice in the markets they prefer and can be more competitive, potentially beating out other generations,” she said. “In some cases, this can potentially lead to price pressure that may ultimately squeeze out hopeful homebuyers with fewer assets backing them.”
But baby boomers are also facing unique pressures, particularly those who live on fixed incomes. Home insurance rates are increasingly challenging, with recent data from Insurify illustrating that rising premiums — on top of other costs like car insurance premiums, groceries and hospital care — have only served to further destabilize the retirement budgets of many older Americans.