In addition to inflation and student loan balances suppressing the homebuying potential of the millennial generation, baby boomers’ fortunes — especially as the pandemic ballooned their home values — are remaining the difference in the U.S. housing market. This is according to Ali Wolf, chief housing economist at Zonda, in a new column published by Fortune

A key differentiator in the competition for homes — which is created by millennials reaching homebuying potential as more boomers begin downsizing, putting them at odds over similarly-sized properties — is that boomers can call upon the equity they’ve built up.

“In today’s housing market, there’s a big overlap between select baby boomers and select millennials,” Wolf told Fortune.

As “empty-nester” baby boomers are seeking a retirement setting, millennials are often seeking the same types of properties as their starter home, she said.

“The key difference here is that the baby boomer will likely be able to tap home equity by selling their existing home, allowing them to perhaps make a more compelling offer on the home compared to the millennials, especially if the latter group are still renting,” she explained.

While most baby boomers are looking to stay in the same relative area they live in now, data from the National Association of Realtors (NAR) indicates that baby boomers take top spots among both homebuyers and sellers at the moment. Childcare costs are also an economic depressant for millennial parents, but also lead their baby boomer parents to try and find a home that can allow them to help by looking after their grandchildren.

Another component that is potentially at play in this dynamic for the reverse mortgage industry could be the Home Equity Conversion Mortgage (HECM) for Purchase (H4P) program since more baby boomers are looking at getting involved in homebuying.

Historically underutilized in comparison with traditional HECM loans, H4P loans have typically been a tougher sell. Product proponents active in the H4P market, however, say that there is renewed opportunity in it given seniors’ high equity levels.

According to the latest edition of the Reverse Mortgage Market Index (RMMI) measured by the National Reverse Mortgage Lenders Association and RiskSpan, senior-held home equity sits at $12.39 trillion. It did show a recent drop, but over the past twelve years the senior cohort has seen a roughly $9 trillion gain in their equity levels.

For reverse mortgage professionals with real estate agents as referral partners, some are seeing previously good experiences lead to new business in the H4P arena, particularly among younger agents according to one industry professional.



“[Agents] tend to go with what they know,” said Jeff Foody of Northwest Reverse Mortgage in an interview with RMD in April. “And the idea of new financing tends to be a younger agent’s game, I guess. Those agents who just took a class and get excited, or the long-term referral partners send this business regardless of the market conditions. But then also in these market conditions, it tends to be the newer agents that are hearing about [H4P] for the first time [who] are more open to it.”