CoreLogic released its Home Price Index and HPI Forecast for April 2021. The data shows high demand and low inventory placing upward pressure on home prices, effectively creating challenges for each generation as buyer preferences change. Both younger and older millennials are active in the housing market, either looking to upgrade or buy their first home. Most of these buyers (64%) are looking for more living space.
At the same time, baby boomers are also active in the market, looking to downsize their home or relocate. Nearly 72% of the baby boomers surveyed stated the desire for a new location was the primary reason for purchasing a new home. Currently, baby boomers own 54% of the nation’s homes, yet many are waiting to sell, creating further pressure for older millennials who want to upgrade.
“Baby boomers are staying in their homes longer, slowing the pace with which existing homes come on the for-sale market. Owner-occupants today have been in their homes for a median of 13 years, about 50% longer than the previous generation,” said Dr. Frank Nothaft, chief economist at CoreLogic.
Home prices increased 13.2% nationwide in April 2021 compared to April 2020. Home prices are projected to increase 2.8% by April of 2022 due to high-cost homes and low supply driving potential buyers out of the market. Eventually, this should cause price growth to slow and the market to stabilize, according to the HPI Forecast.
Frank Martell, president and CEO of CoreLogic, said, “As older homeowners become more comfortable with listing their homes, they are faced with the reality that if they sell, they may get a smaller home for the same price as what they already have. Rather than decreasing their financial burden and cashing out equity to support their retirement, baby boomers may choose to stay put — which could exacerbate inventory challenges.”
