There is a question floating around social media right now that sounds almost ridiculous until you really think about it:
If younger Americans can’t afford houses, who exactly is going to buy all of the homes older Americans eventually need to sell?
It’s actually a very good question.
But I don’t think the answer is as simple as blaming Baby Boomers, blaming Gen Z, blaming investors or waiting for some giant housing crash to solve everything.
The bigger problem is that America’s housing ladder isn’t working the way it used to.
The First Rung of the Housing Ladder Is Breaking
For decades, the housing market depended on people entering at the bottom.
A young buyer purchased a starter home.
That homeowner eventually built equity and moved into a larger house.
The owner of that house moved again.
And somewhere farther up the chain was an older homeowner selling the larger family home they no longer needed.
One transaction helped create another.
Today, that first transaction is becoming much harder.
According to the National Association of Realtors, first-time buyers recently represented only 21% of homebuyers, the lowest level NAR has recorded since it began tracking the number in 1981.
Even more shocking?
The median first-time homebuyer is now 40 years old.
Forty…
Homeownership hasn’t disappeared. But we have pushed the starting line back by more than a decade for a lot of Americans.
And that matters to sellers just as much as it matters to buyers.
No, Gen Z Isn’t Supposed to Buy Grandma’s $700,000 House
This is where I think some of the online conversation gets housing completely wrong.
A 25-year-old Gen Z buyer does not necessarily need to qualify for a $600,000 or $700,000 house owned by a retiring Baby Boomer.
That’s not normally how the market works.
Imagine this instead.
A first-time buyer purchases a $225,000 starter home.
The seller of that home now has the equity to purchase a $350,000 property.
That seller moves into a $500,000 home.
And the homeowner selling that property may be the person who eventually buys the $700,000 home from the retiring Baby Boomer.
The younger buyer didn’t buy the boomer’s house.
But the younger buyer helped create the chain of transactions that allowed somebody else to buy it.
That’s why affordability at the bottom of the market matters all the way to the top.
And Right Now, Affordability Is Rough
Housing prices are only one part of the problem.
The monthly payment is the other.
A buyer borrowing $300,000 at a 3% interest rate would have a principal-and-interest payment of roughly $1,265 per month.
Put that same $300,000 mortgage near today’s higher mortgage-rate environment and the payment can approach $1,900 or more.
Nothing changed about the house.
Nothing changed about the loan amount.
But the payment increased by hundreds of dollars every single month.
Then add property taxes.
Homeowners insurance.
Possibly mortgage insurance.
Maintenance.
Utilities.
And suddenly a buyer who earns a perfectly respectable income can still struggle to qualify.
This is something I see people underestimate constantly.
The problem isn’t always that younger buyers don’t make enough money.
It’s that the amount of house their income will purchase has changed dramatically.
Meanwhile, Boomers Own a Lot of the Housing
This is the other side of the equation.
Baby Boomers have extremely high homeownership rates, and many of them have substantial equity.
A large percentage own their homes outright.
Even more interesting, empty-nest boomers own roughly 28% of the country’s homes with three or more bedrooms.
Think about that.
Some of the very houses younger families desperately want are occupied by one or two people whose children moved out years ago.
But before anyone starts yelling at boomers to sell their houses, there’s another problem.
Where exactly are they supposed to go?
Downsizing Isn’t Always Cheaper Anymore
This is one of the most overlooked problems in housing.
Let’s say someone bought a 3,000-square-foot home years ago.
They owe little or nothing on it.
Their property taxes may be manageable.
They know the neighborhood.
Their doctors are nearby.
Their friends are nearby.
Their children and grandchildren may be nearby.
Now they’re supposed to sell it and buy a 1,700-square-foot ranch.
Sounds logical.
Until they discover the smaller house costs $450,000.
Or there’s almost no one-level inventory in the area.
Or the new house has an HOA.
Or moving costs, closing costs and property taxes wipe out much of the financial benefit.
Or they’re giving up a paid-off home just to move into something that isn’t dramatically cheaper.
Suddenly “downsizing” doesn’t sound nearly as attractive.
So they stay.
And another family-sized house never reaches the market.
This Is Why I Don’t Believe in the Giant ‘Silver Tsunami’
For years we’ve heard predictions that millions of boomer-owned homes would eventually flood the market as older Americans downsized.
Maybe.
But I’m skeptical that it happens as one giant wave.
People don’t turn 70 and automatically put a For Sale sign in their yard.
Some sell.
Some move closer to their children.
Some move into retirement communities.
Some move into assisted living.
Some remain in their houses into their 80s or 90s.
Some homes eventually transfer to children through estates.
Some children keep them.
Others sell them.
The transition is likely to happen over many years rather than suddenly dumping millions of homes onto Zillow one Tuesday morning.
So Who Eventually Buys These Houses?
Probably a combination of people.
Older millennials who finally accumulated enough income and equity.
Gen X homeowners trading up or relocating.
Younger buyers receiving family assistance.
People inheriting wealth or property from parents and grandparents.
Cash buyers.
Investors.
People relocating from more expensive markets.
And yes, eventually more members of Gen Z.
Gen Z homeownership is actually increasing slowly. They haven’t stopped wanting houses.
They are simply entering the market under a dramatically different affordability equation than previous generations did.
And This Creates an Opportunity Sellers Shouldn’t Ignore
Here is where this conversation becomes important for homeowners thinking about selling.
The days of putting virtually any house on the market and expecting twelve offers may be gone in many markets.
Buyers are payment-conscious.
Condition matters again.
Price matters again.
Seller-paid closing costs matter.
Interest-rate buydowns matter.
Homes that are realistically priced may sell.
Homes priced according to what the neighbor received during the frenzy several years ago may sit.
That’s not a housing collapse.
That’s price discovery returning to real estate.
And sellers who understand that will have a tremendous advantage over sellers who don’t.
Buyers Also Have More Options Than Social Media Makes It Sound Like
I don’t like the message telling younger Americans they will “never” own a home.
That’s great content for views.
It isn’t necessarily good financial advice.
Not every buyer needs 20% down.
Depending on the buyer and loan program, there may be conventional, FHA, VA, USDA and other financing strategies available.
Seller concessions can sometimes be negotiated.
Closing costs can sometimes be covered.
Interest rates can sometimes be bought down.
Builders may offer financing incentives.
And sometimes buying a slightly different house, neighborhood or price range makes the numbers work.
None of that means housing is cheap.
It isn’t.
It means “housing is unaffordable” and “I personally cannot buy anything” are not always the same statement.
Before deciding you can’t buy, actually run the numbers.
The Bigger Housing Problem Nobody Should Ignore
Here’s what concerns me more than whether Boomers or Gen Z are winning some generational argument on TikTok.
If Americans routinely have to wait until nearly 40 to purchase their first property, they lose years of potential equity growth.
That affects their ability to move up.
It affects wealth accumulation.
It affects retirement.
And eventually it affects the homeowners who need those younger buyers to enter the market underneath them.
Housing is an ecosystem.
You cannot permanently price the next generation out of the bottom and assume nothing changes at the top.
Eventually something has to adjust.
Maybe mortgage rates improve.
Maybe wages rise.
Maybe builders produce more affordable homes.
Maybe sellers become more willing to negotiate.
Maybe buyers move toward less expensive markets.
Maybe home prices flatten while incomes slowly catch up.
Most likely, it’s some combination of all of those things.
But one thing is certain:
A healthy housing market needs first-time buyers.
Not because Gen Z needs to buy Grandma’s house.
Because somebody has to buy the first house in the chain.
And when that first rung starts working again, a surprising amount of the rest of the housing market can start moving with it.