In the past, boomers had driven a significant amount of demand in the housing industry because they came of age between the 1970s and 1980s, and sought suburban single-family homes during their child-rearing years. But because most boomers - who were born between 1946 and 1964 - are now facing "empty nests" as their children age and move out, their next moves will be extremely critical to the housing market.
During the recent recession, many boomers actually saw their adult children move back home, or stay there longer than kids or parents likely expected. Many who had recently graduated either lost or had trouble finding employment, and moved or stayed home as a means of saving money. But now that the economy is improving once again, those grown kids are moving back out on their own, or doing so for the first time, and boomers have an important decision to make: Will they stay in their old family homes until the market improves, or move to smaller living spaces that are easier to manage and more practical for two-person families?
Those who do choose to downsize will join a growing trend: the number of households in which there is a married couple and their children has dropped somewhat in the last 40 years. Downsizing boomers would likely cause that number to drop even further, and may put some amount of strain on the availability of more reasonably sized living arrangements, such as condominiums and townhouses, for which they may compete with younger consumers - often referred to as Millennials - moving out on their own. Between 1970 and 2010, the number of single people living alone has risen even more sharply than the rate of decline for family households.
Downsizing a home can be beneficial for boomers in the years before retirement because it may allow them to contribute less to their mortgage payments and more to their savings funds, which will, therefore, let them live more comfortably when they do stop working.