REAL ESTATE

How Soaring Home Prices Allowed Boomers to Retire Early

By: Kate Jackson · February 21, 2024 · Reading Time: 3 minutes

Millennials get a bad rap. They’ve been blamed for everything from job hopping and delaying adulthood to the declining birth rate in the U.S. But like every generation before them, millennials are products of their environment — an environment that has been immensely challenging on multiple occasions.

Major milestones, like entering the workforce, getting married, having children, and buying a home, have been repeatedly delayed as millennials continued to come of age alongside major world events, including the dot-com bubble burst in 2000, the 2008 financial crisis and great recession, and more recently, the pandemic.

A New Problem

The pandemic gave rise to various idiosyncratic trends, including people quitting their jobs en masse. Many speculated this great resignation was driven by millennials and their younger Gen Z counterparts — a “turn on, tune in, drop out” moment for a new age. But how could these workers suddenly afford to stop working?

Boom and Bust

A few years on, new research shows it wasn’t younger generations dropping out of the workforce after all. Rather, they switched jobs or took time off before pursuing new opportunities. However, 2 million of the 3.5 million people who quit during the pandemic, and who haven’t returned to work, are what Federal Reserve Chair Jerome Powell is calling “excess retirements”: older workers who opted to retire early.

A recent report from the National Association of REALTORS® (NAR) suggests baby boomers who retired ahead of schedule could in part afford to do so by selling their homes at record prices in the red hot housing market of the pandemic. Data from the American Communities Survey run by the Census Bureau shows homeowners over 65 are less likely to work in cities where home prices increased 10% or more in 2021, compared to cities where prices remained stable.

Meanwhile, high prices, decreasing inventory, and rising mortgage rates kept younger buyers from entering the market, and the median age of home buyers jumped to 53 in 2022, compared to 42 a decade prior. And so, one generation’s boom is another’s bust.

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