Empty-nest boomers, which Redfin defines as baby boomers with one to two people living in the household, own 28% of the country’s large homes, which it defines as three bedrooms-plus, whereas millennials with kids own only 14%, the newly published report found. 

Redfin’s analysis, which uses U.S. census data from 2022 (the most recent available), lists several reasons why boomers “own an outsized share of large homes.” For one, there’s really no financial reason to let go of a large home. More than half of boomers own their homes outright, and their median monthly cost of owning a home, including insurance and property taxes (among other costs) is just $612, according to Redfin. To compare, the median mortgage payment during the four weeks ending Dec. 31, 2023 was $2,361, down $372, or 14%, from October’s all-time high. 

And boomers with a mortgage mostly have an interest rate that’s much lower than the current market rate. “Even if they downsized, they may have a nearly identical monthly payment,” wrote Redfin’s data journalist and senior economist, Dana Anderson and Sheharyar Bokhari. While mortgage rates have fallen from a recent peak at just above 8% in October, the average 30-year fixed rate is sitting at 6.77%.

For millennials it’s much harder to find, let alone afford, a home given how tight supply is. The lock-in effect has severely limited the supply of existing homes for sale. Meanwhile, home prices rose substantially during the pandemic-fueled housing boom, and have generally continued to rise, certainly on a nationwide basis. 

“2023 was the least affordable homebuying year on record; it was especially hard for younger Americans who don’t have equity from a prior home, and the bigger the home, the more expensive it generally is,” Anderson wrote, noting that affordability is expected to improve this year. 

Boomers hold half of U.S. wealth, much of it in housing

Since the 1980s, trillions of dollars have flowed from the public sector to the private sector in a “massive wealth transfer,” that benefited baby boomers; household wealth increased from $17 trillion to $150 trillion, a record high, according to Bank of America Research strategists, led by Ohsung Kwon, touched on this as they pointed out that “everyone locked in 3% mortgage rates, except millennials.”

They’ve also benefited from “an abundance of newly built homes and favorable economic conditions during their prime moneymaking years,” as Redfin pointed out. Boomers built wealth and bought big homes, and now they’ve seen those home values grow four times faster than incomes over the last several decades, the report notes. 

“Boomers hold half of the wealth in the U.S., and much of it is in real estate,” Anderson and Bokhari wrote. “Americans who bought their homes more than 20 years ago didn’t have to spend as big of a portion of their incomes on housing as those—like millennials—who are buying today.”

However, to be clear, lots of boomers entered the housing market in the 1980s, when mortgage rates peaked at roughly 18% as Federal Reserve Chair Paul Volcker attempted to lower inflation, which reached 14% (not dissimilar to last year’s housing market). But to put it simply, boomers had more time to buy homes and refinance their mortgages, which has pushed them ahead—so millennials are renting instead.

Millennials with kids account for nearly 25% of three-bedroom-plus rentals throughout the country—the largest share of any generational category. It helps that, as of late last year, rent was cheaper than mortgages in all but two of 97 major metropolitans. But obviously not all millennials can afford to rent large homes, some live with family or roommates. 

But it hasn’t always been this way. “The landscape has transformed over the last decade: 10 years ago, young families were just as likely as empty nesters to own large homes,” Anderson and Bokhari wrote. And it doesn’t seem to be changing immensely anytime soon.

“There’s unlikely to be a flood of large homes hitting the market anytime soon,” Bokhari said. “Boomers don’t have much motivation to sell, financially or otherwise. They typically have low housing costs, and the bulk of boomers are only in their 60s, still young enough that they can take care of themselves and their home without help.”

Although affordability is set to improve slightly and the lock-in effect is set to ease—so while there won’t be a flood of inventory hitting the market, there will be a trickle, as Bokhari put it.