Before the pandemic, Baby Boomers – those typically classified as people born between 1946 and 1964 – represented 41% of U.S. homeowners. This is according to a special report conducted by the Mortgage Bankers Association’s Research Institute for Housing America.
As older Americans age out of their homes to move to assisted living facilities or smaller rental apartments and ultimately die, that number is likely to shift over the next few decades. Experts are calling this phenomenon the “Silver Tsunami.” It could lead to an influx of 25% of owner-occupied homes going up for sale by 2040.
There were 4.4 million single-family homes for sale by older Americans in 2019. And that’s not the only interesting statistic the report uncovered that year. It was learned that 2.6 million Americans aged 50+ died. Of those 2.6 million, 1 million were renters while 1.6 million of them owned their homes. And of those 1.6 million homeowners, 500,000 of them transferred the ownership of their home to the surviving spouse.
As a result, 1.1 million homes were on the market due to “the mortality of older Americans,” the report said.
“Aging and mortality are glacial and largely predictable. Based purely on changing demographics and population growth, there is enough homebuyer demand to meet most of the existing inventory that will come onto the market over the next decade and beyond from older homeowners,” said Gary V. Engelhardt, author of the report and Professor of Economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University.
As the U.S. demographics change, the housing market is likely to move with it. Experts are forecasting a surplus of approximately 250,000 homes on the market annually through 2032 but no measurable decline in home prices.. This could lead to depressed housing prices and also reduce the need for new construction.
“RIHA’s study skillfully uses multiple data sources to get a detailed picture of America’s aging population and its effect on the housing market,” said Edward Seiler, Executive Director, Research Institute for Housing America, and MBA’s Associate Vice President, Housing Economics. “The impact from Baby Boomers exiting their homes is not insignificant but will happen over a few decades without significantly disrupting the housing market.”
It’s believed that some of the owner-occupied homes will be converted to rental housing while more millennials embrace homeownership. This will help close the gap between supply and demand. It’s likely that new construction will slow as demand for housing will not be as high as it has been in the past few years.
To see the full report from RIHA, click here.
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