Millennials Aren't Having Kids.-Why That's A Problem For Baby Boomer Real Estate

Yaj Yak

Gladys
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After 30-plus years in her career, Donna is counting down the months until retirement. She gleefully shares with me everything she has planned for when she can do whatever she wants, whenever she wants. But in the middle of her excitement, something turns her mood. She clenches her fists and asks me demandingly, “Where are my grandbabies?”

Donna is not alone. While I can’t speak to her particular grandbaby-less predicament, I can say that her experience is part of a much bigger trend – one with serious implications for the Baby Boomers’ retirement plans.

The Center for Disease Control and Prevention released new data showing that the birthrate has dropped to an all-time low in the United States. It seems that the Millennials just aren’t having kids, or at least they’re not having them yet. The only cohort of women showing an uptick in first time births are women over 35 years old. In fact, the rate of first time births for women between ages 40 and 44 years old doubled between 1990-2012.


Observers have suggested a number of reasons why Millennials are proving slow to have children. Some point to economics. Although the recession has been over for nearly a decade, there may be a lasting economic insecurity that is causing young would-be parents to think twice before procreating. Others assert that student debt has delayed parenthood. Perhaps.

Given these pressures, pragmatic Millennials have simply concluded that raising children is too expensive. A recent New York Times article interviewed a 32-year-old woman who wants to wait until her career is further along before having kids. “Once I achieve a certain level of success,” she says, “then I’ll start thinking about a family.”


Whatever the reason, the decision of Millennials to delay or forgo having children will have a ripple effect on wannabe Baby Boomer grandparents. No, I am not concerned about Donna’s desire for grandbabies. I am thinking about a far more practical issue – Donna’s financial security.

The majority of Baby Boomers' wealth is not in the bank, in a pension plan or in an investment portfolio, but in their homes. Despite the popular urban mythology of Boomer life in the big city, more than 70% of Baby Boomers are still living in suburban and rural areas. An increasing number of soon-to-retire and recently retired Boomers are looking to downsize and cash out the decades of equity they have amassed in their homes as a source of income and a chance to live the good life. But how can they cash out without any buyers?

I can imagine the scene of a Boomer trying her best to sell the idea of her sprawling family home built for two, three or more children in a once "highly desirable" community to a younger buyer:

Boomer Seller: The town has great schools.

Millennial Buyer: I don’t have kids.

Boomer Seller: The house has three bedrooms. My husband and I have enjoyed it for years.

Millennial Buyer: I live alone…with my dog.

Boomer Seller: Well, there is a big, wonderful yard for your dog to play in.

Millennial Buyer: It’s a very small dog.

Now, Millennials are not a different species. Most of them still dream of getting married, having children and of owning a home in the suburbs just as their parents did. Plenty of young buyers are already making the leap: Millennials are the largest cohort of home purchasers today, and they are mostly leaving urban spaces in favor of suburbia. But it’s happening later in life for them than for their predecessors. And, while Millennials report a desire for larger homes, their needs and budgets are small.

It’s not only that the rising generation of parents may be delaying kids; they are also just having less of them. Moreover, if economics is depressing the birthrate, it is also likely to be putting downward pressure on larger home purchases as well. And with that being the case, we can expect reduced demand for larger, typically more expensive, three-plus bedroom homes that were built with previous generations in mind.

Many Baby Boomers bought their current homes in the 1980s and 1990s – just when the average size of American homes increased greatly. According to the US Census, between 1985 and 1999 the average home size went from 1,800-plus square feet to nearly 2,300 square feet. By 2017, the average new home size was over 2,400 square feet and was likely to include four plus bedrooms.

While some observers lament the lack of housing stock for Millennials as a byproduct of older generations refusing to move on, the reality may be that the home that most Baby Boomers own is not the house Millennials can afford, use or, in many cases, even want. It may be that the bigger your house is, the harder it will be to get out from under it.

Given this reality, the plans of many Boomers to downsize to a downtown area, transplant themselves to a beach or golf community or even to buy into a continuing care retirement community may have to be put on hold – a curious ripple effect in which the lengthening of one life stage for one generation leads to a delay in a life transition for a different generation.

I’m not so worried about those leisure-seeking Boomers, just as I’m not worried about Donna getting her grandbabies. But for those retirees whose equity is concentrated in their homes and find themselves in need of making a move, due to changes in health, finances, or otherwise, a lack of eager Millennial families looking to snap up their suburban mid to larger size homes could become part of the bigger problem of our widespread unpreparedness for the costs of living in retirement. A ripple effect indeed.
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Gone_2022

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Sep 4, 2013
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If I’m being totally honest. Wife and I are 29. No kids yet, and not sure I want to bring a kid into this messed up world.

We have a 4 technically 5 bedroom house. Most sit empty unless friends sleep over or family on occasion.

Obviously bought it with room to grow.... but again, this world is fucked up. It’s gotta be rough being a parent sometimes.
 

Lord Tin Foilhat

TCG Conspiracy Lead Investigator
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If I’m being totally honest. Wife and I are 29. No kids yet, and not sure I want to bring a kid into this messed up world.

We have a 4 technically 5 bedroom house. Most sit empty unless friends sleep over or family on occasion.

Obviously bought it with room to grow.... but again, this world is fucked up. It’s gotta be rough being a parent sometimes.
Worlds always gonna br fucked up a bit, the world is the safest it's ever been currently.
 

Yaj Yak

Gladys
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Nope, being a parent is an awesome experience. Only the first few months are rough, everything else after is cake.

until they (not your kids directly of course, generally speaking) start dealing ecstasy out of your basement on tuesday nights :s00ls:

Worlds always gonna br fucked up a bit, the world is the safest it's ever been currently.

fucking :WERDDDDD:
 

Sprayin

Public Enemy #1
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This problem is very real in every developed nation. And it's not just the housing market it's going to have an effect in. There isn't going to be enough people in the workforce to replace the retiring boomers, and then eventually provide for their Healthcare when they get really old. When I was in Australia in 2015, this is one of the things we talked about, and the people there said the government has considered euthanasia as a means of dealing with the issue in the future.
 

GTPpower

TCG Elite Member
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This problem is very real in every developed nation. And it's not just the housing market it's going to have an effect in. There isn't going to be enough people in the workforce to replace the retiring boomers, and then eventually provide for their Healthcare when they get really old. When I was in Australia in 2015, this is one of the things we talked about, and the people there said the government has considered euthanasia as a means of dealing with the issue in the future.

And that is the sole reason the government wanted to be in charge of healthcare in the US.
 

radioguy6

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I keep telling my boomer parents to get out of their empty "larger" house NOW, while they can get the most for it. Even if it means going into short term lease/rental unit. I'm afraid the market may take a downturn and/or they will have a hard time unloading it for a decent price. They want to downsize and retire out of state eventually.

Also, I am a DINK millennial with a <2k sqft house, yard, 2 dogs. Not too small/too big for us and we have zero plans to have children. Wife is 30, have a few years to change our minds but at this point its a no.
 
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