Baby Boomers Are Not Leaving Their Single-Family Homes for Apartments

Popular notion holds that Baby Boomers, members of the massive generation born between 1946 and 1965, have begun downsizing from their single-family homes in large numbers. Supposedly, many of these downsizing Boomers are moving into apartments, thereby helping to drive the surge in multifamily rental demand.

This new edition of Housing Insights from Fannie Mae's Economic & Strategic Research Group challenges the Boomer downsizing narrative. Available data through 2013 reveal no significant reduction in the rate at which Baby Boomers occupy single-family detached homes. Single-family occupancy has been stable even among the oldest Boomers (those born between 1946 and 1955), who are overwhelmingly empty-nesters and who have begun to retire in large numbers, life changes that might be expected to trigger downsizing.

As suggested by the lack of downsizing activity, Boomers have not been a major driver of apartment demand growth. In fact, the number of Boomer apartment dwellers has not budged in recent years, whereas the number of Millennials (those born between 1981 and 2000) in multifamily rentals has grown by nearly half a million annually.

Evidence that Baby Boomers are not downsizing has important implications for the housing market. Boomers have an enormous residential footprint, occupying some 32 million single-family detached homes. Moves by large numbers of Boomers out of this vast inventory of single-family dwellings and into apartments could put downward pressure on single-family home prices, shift the composition of new housing construction further toward multifamily structures, and change the types of apartments being built. The potential for substantial market impacts from Boomer downsizing suggests that their housing behaviors merit continued close monitoring.

To learn more about these findings, read our latest Housing Insights.

Patrick Simmons
Director, Strategic Planning
Economic & Strategic Research Group

August 20, 2015

The author thanks Orawin Velz, Kim Betancourt, and Mark Palim for valuable comments in the creation of this commentary. Of course, all errors and omissions remain the responsibility of the author.

Opinions, analyses, estimates, forecasts and other views of Fannie Mae's Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.