Baby boomers now own a majority of U.S. homes and have the financial means to stay where they are, keeping the housing market stuck for the foreseeable future, according to top Wall Street analyst Meredith Whitney.
The CEO of Meredith Whitney Advisory Group, whose prediction of the Great Financial Crisis earned her the moniker “Oracle of Wall Street,” pointed out in a Financial Times op-ed that more than 54% of homes are owned by seniors, up from 44% in 2008.
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She added that 79% of seniors own their homes, and three-fourths of them don’t have a mortgage, meaning they have an enormous amount of equity that can help cover rising homeownership costs, such as insurance.
“This has made it easier for seniors to hold on to their homes by tapping into some of this built-up equity,” Whitney explained. “And growth in such funding will be a major theme for the US economy in the next three to four years.”
The cheapest and fastest-growing form of consumer debt is now home equity lines of credit, demonstrating how much housing has become a financial resource, and seniors account for 41% of revolving home equity credit outstanding, she said.
Other debt products and new forms of credit are also available to homeowners who want to squeeze some cash out of their properties. The upshot is that housing inventory will remain limited as boomers are less inclined to downsize to smaller homes and have the financial means to stay put.
“That means the housing market will continue to be very different from before. There will be no quick fixes,” Whitney warned. “Even as 30-year mortgage rates decline, don’t expect existing home sales to pick up materially. Seniors control the proverbial chessboard, and with so many options, they aren’t moving anytime soon.”
That’s bad news for millennials and Gen Zers trying to enter the housing market. In fact, the housing market has become so unaffordable for these buyers, the number of first-time home buyers shrank to a historic low.
In May, Whitney also noted that many boomers can’t afford to move out and have been borrowing against their homes to stay where they are.
To be sure, boomers collectively have $75 trillion of wealth. But that’s not distributed evenly, and Whitney estimated that just one in 10 seniors can afford assisted-living facilities.
“Seniors are living paycheck to paycheck,” she told Bloomberg TV.
The drag from boomers on the housing market is just one of several. As President Donald Trump’s tariffs and immigration crackdown hit homebuilders, the supply of new homes is slowing.
