[2017-2] Recent Housing Consumption Behavior of the Baby Boom Generation and Implications

Macro Economy
Generation Negative Conditions Retirement Boomers
Research Department(02-759-4172)

With the nearing retirement of a large number of baby boomers (born between

1955 and 1963), who account for 19.2 percent of the working-age population,

there are concerns that this may have negative impacts on the housing market. In

this regard, this paper analyzes the housing consumption behavior of each

generation, particularly in terms of housing tenure choice and living space, using

basic statistical data from the Survey of Household Finances and Living Conditions

for 2012 through 2016.

Looking at the housing consumption behavior of baby boomers, contrary to

general expectations, they do not sell their houses or reduce their living spaces

around the time of retirement. Our panel model, designed to control for other

factors that affect housing consumption behavior, such as the number of

household members and income, also shows that the baby boomers' housing

consumption behavior has not changed much. According to the results, as the

baby boomers get older, they are more likely to be owner-occupiers living in

larger spaces, and their housing consumption behavior is not affected much by

factors such as the number of household members and income. However, the

older group, those aged 65 or more, shows totally different housing

consumption behavior from that of baby boomers. Members of the older

generation are less likely to be owner-occupiers and tend to live in smaller

spaces as they get older.

This paper conducts a simulation to estimate how this difference in housing

consumption behavior between baby boomers and the older generation will affect

housing consumption behavior of entire households in the future. It is estimated 

that housing tenure choices will not change much ─ while baby boomers joining

the older generation will work as a factor dragging down their housing

consumption, it will be offset by consumption by the younger generation. Living

spaces, however, are estimated to gradually decrease.

Considering these analysis results, future housing supply policy should focus on

small- and medium-sized housing units, in reflection of changes in housing demand

following demographic changes, and efforts need to be made to ensure income

stability for the older generation, for example by facilitating reserve mortgage


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