Are boomers too emotionally attached to list their homes?

Emotions have long played a role in consumer perceptions of homeownership, but a study from Opendoor looks to quantify, especially for baby boomers and Gen X, how deep that attachment is.

While much has been made of the lock-in effect — potential sellers keeping their homes out of the market because they would not be able to get a new mortgage at a lower interest rate — the emotional tie one has to a property, especially one they lived in for an extended period of time, may also be playing a role.

Almost two-thirds of those 55 or older surveyed said they have an emotional attachment to their current residence. Of that group who are home sellers, 56% have lived in that property for over 15 years.

Just under three-in-10, 29% have a strong sentimental attachment to their home, while 37% have some sentimental feelings. The remaining 34% have little or no attachment to the house they currently own.

This is similar to the results of a survey from Leaf Home and Morning Consult released in January that found 73% of baby boomers have been in their current house for 11 years or longer, and 55% of them plan to age in place.

The Opendoor report is looking at the "Great Wealth Transfer," where nearly $68 trillion in assets, including real estate, is set to pass from those 55 or older to younger generations. The older demographic includes the baby boomers (which is considered to have started with those born in 1946), as well as the portion of Gen X born between 1965 and 1980.

But the emotional attachment to a home could impact the timing of the real estate portion of the wealth transfer, Kerry Melcher, Opendoor's head of real estate argues.

"Since home sellers have equity, a low annual percentage rate, or a combination of both, finding a solid reason to sell is already tough," said Melcher, who is also a third-generation Realtor. "Add in emotional attachment — from memories with loved ones or familiarity with an existing neighborhood — and the decision to move becomes even harder."

A 2022 study from the Mortgage Bankers Association's Research Institute for Housing America found more than 4 million existing homes from the aging and mortality of older homeowners are expected to come on to the market each year through 2032.

But demand should remain high enough that a feared "silver tsunami" of an overabundance of homes entering the for sale market should not occur, the RIHA study found.

"With limited housing inventory across America posing as a hurdle for many first-time home buyers and other homebuying hopefuls, it's clear that Gen X and Boomer moving timelines have the potential to impact the projected great wealth transfer and future generations' ability to find homes of their own," Melcher said.

Part of that driving force is the emotional return on investment, the E-ROI, Melcher noted. But the survey also found that a significant number of sellers, 36%, found joy in handing over the keys to the next homeowner, "suggesting that on top of sentimental feelings, there's genuine excitement for new beginnings," she continued.

In the Opendoor survey, 28% of respondents said letting go of a home that has sentimental value to them is a challenge to selling the property.

Meanwhile, 22% stated their emotional ties to the home influenced the selling decision. That means sentimentality might be more of a driving force in that timeline than what previously had been expected, Opendoor said.

Concern over how the process moves along can also play a role. The survey noted 42% of respondents, both sellers and buyers, said they were stressed or anxious about the real estate transaction. At the same time, 31% claimed they were calm and collected.

The E-ROI that these older homeowners are prioritizing right now should not be ignored by mortgage originators.

"It's clear that these attachments are shaping the market, and, as a result, could prolong the flow of real estate to younger generations via the great wealth transfer," Melcher said. "The real estate finance community can better serve their customers by understanding the emotions driving their clients' decisions."

YouGov conducted the online survey for Opendoor in December 2023 of 2,010 U.S. adults who had either bought or sold a home within the last 12 months or were in the process of doing so, across all demographics; this report concentrated on results of those 55 or older.

The emotional aspect of homeownership for all generations could lead to some legal entanglements.

A separate survey from LegalShield found that 73% of respondents believed a real estate broker was the person with sufficient enough expertise to handle all the legal requirements for a home sale or purchase.

Yet 30% admitted they had to back out of a home purchase due to issues like hidden defects, boundary conflicts, or title problems, items LegalShield, an online platform that provides legal advice, said could have been identified by an upfront review from an attorney.

"The majority go through this complex process without legal guidance from a lawyer, putting their life savings at major risk of costly mistakes and missed issues," said Warren Schlichting, CEO of LegalShield, in a press release.

This survey was conducted on April 26, with 1,218 respondents. The sample was balanced by age, based on U.S. Census data.