Why Boomers Won’t Move—and Families Can’t Start

ByTimothy Alexander

America’s housing market isn’t fluid—it’s stuck. Two forces do most of the work: ultra-low fixed mortgage rates that many owners locked in during 2020–2021, and decades of zoning that restricts “missing-middle” housing on most residential land. Together they keep Baby Boomers in place, starve the market of entry-level inventory, and push young adults to delay household formation and children. The costs show up in falling mobility, widening intergenerational wealth gaps, and weaker labor dynamism. The upside is clear, too: when rates normalize and downsizing becomes easier—especially where cities have opened the door to more homes—young families, local economies, and even many seniors stand to gain.

The Mechanics Of “Rate Lock-In”

The 30-year fixed is a uniquely American stability product. When mortgage rates plunged below 3% in 2020–2021, tens of millions refinanced or bought at once-in-a-lifetime costs. When rates later climbed into the 6–7% range, the gap between an owner’s current loan and any new loan turned into a penalty for moving. Economists call this “rate lock-in.”

  • Why owners don’t list: Swapping a 3% mortgage for 6–7% means a far higher monthly payment on the replacement home—even if it’s smaller. For many households, that math alone kills the move.

  • How big is it: A majority of mortgaged homeowners now hold rates far below the market. As the spread widened, owner mobility fell and existing-home listings dropped well below historical norms.

  • Who is most affected: Owners who bought or refinanced during the trough, often in their 50s and 60s, have the strongest incentive to stay. Older households also have deeper community ties, making the financial barrier even stickier.

Result: turnover collapses. The market has fewer move-up sellers, fewer move-down sellers, and almost no “recycled” starter homes.

Zoning: The Long Shadow Of “Single-Family Only”

Rate lock-in wouldn’t be as damaging if supply were flexible. It isn’t. For decades, large portions of urban and suburban land have allowed only detached single-family houses on large lots, often with mandatory off-street parking. Duplexes, triplexes, courtyard apartments, ADUs, and cottage clusters—the “missing middle”—were zoned out.

  • Supply throttled: When demand grows but rules keep lot sizes big, densities low, and approvals slow, construction lags population. Builders then chase higher price points to cover land, fees, and financing, leaving entry-level product scarce.

  • Few places to downsize: Seniors who might move locally can’t find one-level, low-maintenance options in their neighborhoods. When there’s nowhere to go, they stay.

  • Neighborhood veto power: Lengthy discretionary approvals and parking or design mandates add friction, expense, and years of delay, further biasing output toward larger, costlier homes.

Result: scarcity becomes structural, amplifying lock-in. The existing stock is misallocated—many empty-nesters in four-bedroom houses; many young families in small rentals or living with parents.

Who Holds The Family-Sized Homes—and Who Doesn’t

Empty-nest Boomers now control an outsized share of three-plus-bedroom homes, while millennials with children own far fewer than prior generations did at the same age. At the same time, the median age of first-time buyers has drifted to the late-30s, and their market share has sagged. Two trends drive this:

  1. Financial comfort for incumbents: Many Boomers either own free and clear or carry very low payment burdens. Their effective housing cost is hard to beat in the open market.

  2. Entry barriers for newcomers: Down payments are harder to save when rents are high; student loans and child-care costs tighten budgets; and there’s simply less to buy in the price ranges where first-timers shop.

When older owners don’t exit and builders don’t produce smaller homes, the ladder breaks: fewer “move-ups” and “move-downs” means fewer starter homes turn over.

The Demographic Consequences: Household Formation And Fertility

Housing is not just an asset; it is the platform for family life. When homes are scarce or too expensive:

  • Marriage and cohabitation are delayed. Many young adults remain renters longer or move back in with parents to save, postponing independent households.

  • Birth timing shifts. Couples often wait to have a first or next child until they secure enough space and stability.

  • Geographic mobility weakens. Workers pass on job opportunities if housing near the new job is unattainable, blunting productivity and wage gains.

  • Aging in place concentrates. Communities tilt older when younger families can’t buy in, hollowing out school enrollment and local services that rely on a steady inflow of households with children.

These outcomes compound: the longer turnover stays low, the longer family formation stalls and the more local age imbalances widen.

Macroeconomic Costs And Intergenerational Equity

Beneath the household-level pain sit broader economic losses.

  • Lower mobility = lower growth. When people can’t move to productive regions or right-size their housing near jobs, labor markets allocate talent less efficiently.

  • Wealth gaps widen. Long-time owners benefit from appreciation and low payments; non-owners pay rising rents and miss compounding home equity. Inheritances will eventually transfer wealth, but unevenly, reinforcing disparities between the children of owners and the children of renters.

  • Underused stock. Millions of large homes house one or two people while growing families squeeze into small spaces. That mismatch is a hidden, ongoing cost.

What Works: Policy Examples That Add Oxygen

Minneapolis, Minnesota
The city ended single-family-only zoning and eased parking mandates, allowing duplexes and triplexes by right. Permitting rose, rent growth cooled relative to peers, and the housing mix began to broaden. The reform didn’t “towerize” neighborhoods; it legalized gentle density and simplified approvals—key to actual delivery.

Houston, Texas
By slashing minimum lot sizes in the urban core, Houston enabled a townhouse boom. Fee-simple homes on small lots multiplied doors on the same dirt and produced attainable price points closer to jobs. The lesson: lot-size reform can scale quickly when approvals are predictable.

California (ADU Revolution)
State laws standardized and protected accessory dwelling units. Cities responded with pre-approved plans and streamlined review. ADUs went from niche to a substantial share of new homes, creating flexible options for multigenerational living, aging in place, or rental income that pencils out.

Oregon (Middle Housing Statewide)
Oregon legalized duplexes, triplexes, and cottage clusters in most single-family zones. Early production was modest, but statewide rules reduced local veto points and established a durable baseline for gentle density.

Raleigh and Other Sun Belt Cities
Incremental reforms have opened more districts to missing-middle housing and reduced parking minimums, aligning codes with the kinds of units downsizers and first-timers actually need.

Common threads: by-right approvals, clear standards, smaller lots, fewer parking mandates, and simple infill typologies. These are the levers that convert zoning text into keys in doors.

Unlocking The Mortgage Side

Zoning reforms free builders; mortgage reforms can free owners.

  • Assumable or portable mortgages. Today, most conventional loans aren’t assumable and rates aren’t portable. Expanding either would let a buyer “take” the seller’s lower rate or let a seller carry their rate to a new home, shrinking the move-penalty that freezes listings.

  • Transaction frictions. Lowering closing costs and speeding appraisals, inspections, and approvals reduces the “hassle tax” on mobility—especially for older sellers.

  • Property-tax portability. Letting seniors transfer assessed value when moving within a state removes a tax shock that deters downsizing.

None of these substitutes for more supply, but each targets a real source of inertia.

Who Benefits When Rates Normalize Or Downsizing Accelerates?

Young Families And First-Time Buyers
As the rate gap narrows and listings rise, bidding wars ease, price growth moderates, and there’s more to choose from at entry-level sizes. Couples who delayed kids for space can act, and the median age of first-time buyers can drift back down.

Move-Up And Move-Down Buyers
Mobility returns to the ladder. Families can trade a townhouse for a yard; empty-nesters can trade a four-bedroom for a one-level condo nearby. Turnover improves the match between homes and households.

Local Communities
Schools regain enrollment. Small businesses gain customers. Underused infrastructure serves more residents without new miles of road or pipe.

Regional And National Economies
Workers relocate more freely to high-productivity areas, raising output. Construction spreads across more price points, not just luxury tiers, smoothing cycles and diversifying local tax bases.

Seniors Themselves
Downsizing can unlock equity for retirement, reduce maintenance burdens, and bring people closer to services or family. Many Boomers feel “house rich, cash constrained”; a liquid market is, in part, for them.

Who May Lose In Relative Terms
Investors that profit from ultra-tight for-sale supply face more competition from owner-occupiers. Owners with the most advantageous ultra-low-rate loans surrender a rare asset when they move. But in net, a healthier market expands opportunity.

A Practical Playbook For Cities And States

  1. Legalize Missing-Middle Housing Everywhere
    Allow duplexes, triplexes, fourplexes, cottage clusters, and small apartments by right in residential districts. Set form-based standards and skip the case-by-case gauntlet.

  2. Cut The Cost Multipliers
    Reduce or remove minimum lot sizes and off-street parking mandates; permit tandem and shared driveways; right-size setbacks and lot coverage to fit smaller formats.

  3. Make Small Infill Easy
    Create pre-approved plans for ADUs and small plexes; offer same-day or over-the-counter approvals for compliant projects; time-limit discretionary reviews.

  4. Target Senior Mobility
    Encourage one-level, elevator-served buildings and patio-home subdivisions near services; allow property-tax portability; fund move counseling and light home-swap programs.

  5. Support First-Time Buyers
    Offer down-payment assistance tied to owner-occupancy; pilot assumable-rate marketplaces for eligible loans; prioritize end-users over bulk investor purchases.

Do these together, and you address both sides of the freeze: more places to go and less penalty to move.

Conclusion: From Frozen To Fluid

Low-rate mortgages handed millions of households golden handcuffs. Zoning rules locked the closet where the keys should be. The result is predictable: Boomers age in large homes, starter homes don’t circulate, and young families wait. That waiting shows up in later marriages, later births, weaker mobility, and slower growth.

This is fixable. Normalize rates even partway and the move-penalty shrinks. Make mortgages more transferable and the calculus changes. Legalize the modest, human-scale housing that once filled American neighborhoods and seniors will have dignified places to go while young families gain a path in.

When the market thaws, the winners are the people who need housing to live a life, not just an investment to hold a yield: toddlers who get backyards; parents who trade commute time for family time; grandparents who age near the grandkids; neighborhoods that feel alive again. That is the payoff of turning a housing gridlock back into a housing ladder—and it’s within reach if we align the rules with the families we say we value.

References

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