Boomer generation prepares historic $17 trillion wealth transfer through home equity

Children of baby boomers are poised to inherit a significant portion of wealth as their parents prepare to pass down a large home equity fortune. As the youngest boomers turn 60, this generational shift, referred to as the "silver tsunami," indicates that many plan to transfer their real estate assets to their children.

A recent survey by Freddie Mac reveals that three out of four boomer homeowners intend to leave either the proceeds from the sale of their homes or the homes themselves to their offspring. This anticipated wealth transfer is expected to reshape the financial landscape for younger generations.

By mid-2024, baby boomers hold approximately $17 trillion in home equity, accounting for about half of the nation's total homeowners' equity. This accumulation largely stems from rising real estate values over the past decade.

Boomers, now in their 60s and 70s, are nearing retirement age with an optimistic outlook on their finances despite challenges like the Great Recession and COVID-19 pandemic. About 68% of surveyed boomer homeowners feel confident about having a comfortable retirement, though this figure has decreased from previous years (76% in 2016 and 81% in 2021).

Downsizing is becoming more common among boomers planning to move; two-thirds aim to transition into smaller, more manageable homes with lower operating costs. Nearly 75% of those surveyed plan to leave their home or its proceeds to their children, potentially benefiting younger generations.

The survey also highlights gender differences in living arrangements: around 40% of women are open to living with their children as they age compared to only 25% of men. Some who prefer not living with children consider residing nearby or on shared properties.

While most boomers do not rely on home equity for retirement funding—only 9% plan to use it or opt for reverse mortgages—they view it as a financial cushion. Instead, they will primarily draw from savings, pensions, and Social Security.

This wealth transfer could significantly impact millennials inheriting valuable properties amid challenging housing market conditions characterized by high mortgage rates and prices. Freddie Mac has introduced resources such as specialized mortgages for property renovations or creating accessory dwelling units (ADUs) that can provide income while allowing boomers longer stays in their homes.

The silver tsunami may lead to long-term financial stability across future generations through this substantial wealth transfer.