June 2021

Will baby boomer downsizing create housing opportunities?

State2010 Avg. Equity Percentage2020 Avg. Equity PercentageChange in Equity Percentage
National29.0%49.1%20.2%
Alabama32.1%42.6%10.5%
Alaska33.1%39.1%6.0%
Arizona3.5%45.5%42.0%
Arkansas25.6%36.8%11.1%
California28.6%56.5%27.9%
Colorado27.4%48.9%21.5%
Connecticut41.4%43.4%2.1%
Delaware31.4%42.2%10.9%
District of Columbia41.6%48.1%6.6%
Florida6.4%46.6%40.2%
Georgia15.9%45.5%29.6%
Hawaii45.9%57.5%11.6%
Idaho24.4%52.2%27.8%
Illinois26.1%40.3%14.2%
Indiana30.3%47.0%16.6%
Iowa32.6%37.6%5.0%
Kansas30.3%45.2%14.9%
Kentucky32.4%42.5%10.1%
Louisiana25.9%26.1%0.3%
Maine39.5%50.9%11.5%
Maryland29.9%41.5%11.7%
Massachusetts40.1%53.1%13.0%
Michigan12.9%45.5%32.7%
Minnesota34.0%46.2%12.2%
Mississippi21.5%38.3%16.7%
Missouri29.1%43.9%14.7%
Montana39.1%50.8%11.7%
Nebraska27.4%39.9%12.5%
Nevada-25.7%45.0%70.7%
New Hampshire29.5%46.0%16.5%
New Jersey37.4%46.1%8.7%
New Mexico34.8%44.3%9.5%
New York49.1%52.2%3.1%
North Carolina28.8%45.5%16.7%
North Dakota39.5%40.1%0.6%
Ohio24.6%44.2%19.6%
Oklahoma29.9%35.8%5.9%
Oregon29.4%51.1%21.7%
Pennsylvania37.6%46.7%9.2%
Rhode Island37.6%50.8%13.2%
South Carolina27.2%45.3%18.1%
South DakotaNo DataNo DataNo Data
Tennessee28.4%45.6%17.2%
Texas30.8%47.7%16.9%
Utah24.9%50.5%25.5%
VermontNo DataNo DataNo Data
Virginia29.3%43.2%14.0%
Washington31.9%54.7%22.8%
West Virginia30.8%37.9%7.1%
Wisconsin31.5%43.6%12.1%
Wyoming33.1%46.1%13.0%

Over the last decade, a good portion of baby boomers gained significant equity in their homes,Footnote1 which now gives this retiring generation many lifestyle options. If they were to downsize, younger homebuyers could benefit too.

The nation's largest increases in home equity occurred in the West and many Mountain States, as well as in Michigan, Georgia and the retirement-friendly state of Florida. But, just as notably, growth in home equity varied widely from state to state.Footnote1

Only time will tell where, when and how many boomers will sell their homes, and help many a Gen Xer and millennial achieve their version of the American dream.

History lessons

Back in 2010, after the housing bubble led to the Great Recession,Footnote2 the average amount of home equity was just 29.0%Footnote1 nationally. This lack of adequate home equity prior to the upheaval contributed to nearly 9.3 million American homeowners losing their homes.Footnote3

By the close of 2020, in stark contrast, and reflecting the resiliency of the current economy, average home equity grew to a sizable 49.1%.Footnote1

In a comment made during the earliest stage of the pandemic, Mark Fleming, chief economist at First American Financial Corp., offered the following reassurance: "It’s important to remember that the housing market has traditionally aided the economy in recovering from a recession. Consumers who are less affected by a downturn are willing to buy and sell, which can help get other parts of the economy moving." Footnote4

What's more, the Federal Reserve's response to the 2001 dot-com recession provides another valuable insight. The Fed cut the benchmark interest rate to near zero and continued to provide huge injections of liquidity, which corresponded to gradual rises in home prices. During our current situation, the Fed took similar action.Footnote2

Baby boomer equity and opportunity

By 2020, more than 67 million U.S. homeowners were over the age of 55, and collectively, they accounted for two-thirds of all U.S. home equity, an astounding figure. Importantly, nearly 25 million of these homeowners planned to move at least one more time. Footnote5

For Gen Xers and millennials whose confidence in their finances remains strong, this could be the right time to buy. Likewise for financially secure baby boomers, this could be a sensible time to downsize.

1 Source: CoreLogic, Data dates: January 2010 to December 2020, Data Pulled: 03/17/2021.

2 "What is the Impact of a Recession on the Housing Market?" CoreLogic, Bin He, April 1, 2020.

3 "Should fear of the next recession keep you from buying a home?" Bankrate®, Kelly Anne Smith, March 16, 2020.

4 "Housing Market May Be Poised to Weather Coronavirus Impact, According to First American Real House Price Index," First American, Business Wire, March 31, 2020.

5 "Opinion: Are baby boomers ruining the housing market for everybody else?" Los Angeles Times, Paul Kupiec and Ed Pinto, January 5, 2020.


MAP3562093 | 04/2021

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