Why More Baby Boomers Are Upsizing Instead of Downsizing

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When it came to homeownership, previous generations typically opted for smaller, downsized homes as they became empty nesters and entered the next stage of life. However, Baby Boomers are bucking that trend and opting for something else.

A pattern has emerged with many older homeowners staying put in their large family homes, or purchasing homes that are just as large, or sometimes even larger, than the ones they’re currently in. The Wall Street Journal recently reported that many affluent Boomers are buying larger homes designed around entertaining, multigenerational living, and aging in place rather than following the traditional downsizing path.

According to housing research, that shift is reshaping today’s market with inventory already limited. Learn why Baby Boomers are upsizing instead of downsizing, what’s driving the trend, and how today’s young homebuyers are affected.

Why More Baby Boomers Are Choosing to Upsize

Before we look at why Boomers are choosing to upsize, let’s examine why downsizing was the previous norm.

Downsizing makes sense because smaller properties are lower-maintenance, they no longer need the extra space, monthly housing costs are often lower, and it allows sellers to potentially make a decent profit off selling their home that they can put toward other expenses toward the end of their lives.

That no longer appears to be the goal, as many older buyers now want homes that are better suited to their current lifestyle and future needs. That can be for a number of reasons.

Additional bedrooms can be converted to bonus rooms, create play areas for grandchildren, and flexible floor plans accommodate overnight guests or adult children who may move back home. Large kitchens and other living spaces allow for extended family gatherings around the holidays or other events. Some also want the extra space to be able to age in a familiar place with at-home care rather than moving to a new, unfamiliar facility.

Finances are also a major consideration. A homeowner with a paid-off mortgage might not want to move somewhere that comes with a new monthly mortgage payment. Closing costs, moving expenses, and other transaction costs can further reduce the financial benefits of moving. Homeowners with considerable equity are also in a favorable position to outbid other potential buyers with less equity.

What This Means for Younger Homebuyers

First-time buyers, as well as second- or third-time buyers looking to move into a home where they can raise their family for the next 10 to 20 years, have found fewer options than many expected. This shift has been slower than some housing experts anticipated.

Fortune also highlighted that housing researchers are seeing a widening divide between older homeowners who have built equity and can continue trading up, and younger buyers who face far greater affordability challenges.

Without these homes becoming available, supply remains limited. This prices out younger buyers who don’t have the equity to compete for homes in expensive neighborhoods, desirable school districts, or larger properties. Many younger adults continue delaying homeownership because of affordability challenges.