The U.S. housing market is experiencing a major transformation, with Baby Boomers now surpassing Millennials as the largest group of homebuyers. This shift marks a significant change in the dynamics of the housing market, where older Americans are making their move with substantial financial advantages.
A new report reveals that many Boomers are increasingly purchasing homes using cash, bypassing the need for traditional financing.
In contrast, younger generations, particularly Millennials, continue to rely heavily on mortgages. According to Newsweek, this trend is reshaping how different generations navigate the real estate landscape, highlighting a growing divide in purchasing power.
A Changing Landscape in Homebuying
The National Association of Realtors’ 2025 Home Buyers and Sellers Generational Trends Report shows that Baby Boomers, born between 1946 and 1964, have overtaken Millennials in the homebuying market.
Younger Boomers, along with older Boomers, represent 26% and 16% of the market respectively, surpassing the 12% and 17% of younger and older Millennials.
This shift highlights a dramatic change in the dynamics of the housing competition, particularly as older Americans, many of whom have substantial home equity, dominate cash purchases.
“In a plot twist, baby boomers have overtaken millennials – the largest U.S. population – to become the top generation of home buyers,”
Jessica Lautz, NAR deputy chief economist and vice president of research, said in an April 1 press release.
What’s striking is that half of older boomers and two out of five younger boomers are purchasing homes entirely with cash, bypassing financing altogether.
Cash Buyers vs. Mortgages : The Financing Divide
One of the most notable differences in the market is the way these two generations are financing their home purchases. More than half of older Boomers are paying for their homes entirely in cash, bypassing the need for financing. In contrast, more than 90% of Millennials are still depending on mortgages.
This financial divide underscores the growing disparity in purchasing power between the two generations.
Kevin Thompson, CEO of 9i Capital, told Newsweek :
“We’ve got nearly 10,000 people turning 65 every single day in this country. That means a large portion of Boomers are sitting on significant home equity.”
“Many are downsizing or moving into retirement communities, often coming to the market with cash in hand, which gives them a clear advantage.”
The Economic Pressures on Millennials
Despite being a significant portion of first-time buyers, Millennials are facing significant economic challenges. Rising home prices and borrowing costs have made it increasingly difficult for them to enter the housing market.
As of 2024, the median age of a homebuyer has risen to 56 years, up from 31 years in 1981. These pressures, coupled with high mortgage rates, are contributing to a more challenging homebuying experience for younger buyers.
“Millennials in many ways are trapped at the moment, with most of their income being gobbled up by a higher cost of living,” said Alex Beene.
A financial literacy instructor for the University of Tennessee at Martin. He added,
“At the same time, Baby Boomers who saved over the decades and paid off their initial housing purchases can hop to new properties without having to finance.”
Why Baby Boomers Are Dominating the Market
The surge in Baby Boomers entering the market is largely driven by their significant home equity and the growing number of individuals reaching retirement age.
With nearly 10,000 people turning 65 every day in the U.S., many Boomers are downsizing or moving into retirement communities, often with cash in hand, giving them a competitive edge over younger buyers relying on loans.
Alan Chang, a title and escrow expert, commented,
“Real estate is likely going to be the largest purchase in the average American’s lifetime.”
He noted that the increased appreciation over the last five years has made real estate out of reach for many, but it has also allowed established homeowners to build equity at an unprecedented rate.
This has enabled Boomers to sell and purchase homes as an all-cash transaction, often outbidding others who depend on loan contingencies.
The Long-Term Impact on Younger Generations
This generational divide in homebuying is expected to have lasting effects on the housing market. Millennials, burdened by high costs of living and student loan debt, may find it increasingly difficult to achieve homeownership in the near future.
On the other hand, Baby Boomers, who have had decades to accumulate wealth, are positioning themselves to dominate the housing market, further consolidating the wealth gap between generations.
Thompson also emphasized that Boomers have more capital:
“Boomers have more capital. Millennials and younger buyers are far more reliant on financing. That’s not surprising since Boomers have simply had more time to build wealth. It also reflects a broader reality: the majority of assets in this country are still held by older generations.”
Economists predict that mortgage rates will remain above 6% throughout 2025, continuing to challenge affordability, particularly for younger, first-time buyers.
As the Baby Boomer generation holds a larger share of the nation’s wealth, the growing reliance on cash purchases could reshape the housing market dynamics for years to come.
