In the next 20 years, analysts are expecting a housing inventory wave—akin to the boom in the early 2000s—as the aging population releases supply.
Brace for the Silver Tsunami.
Over the 2017-2027 period, 920,000 baby boomer-held homes will unleash yearly, with 1.17 million materializing in the succeeding years, from 2027-2037, according to analysts at Zillow. All told, 20 million more properties, or approximately 27 percent of the current owner-occupied stock, will come onto the market, as the elder generation passes on.
According to Zillow, the boom compares to the construction onslaught prior to the recession, and could counterbalance home-building in the next 20 years. Between 2009 and 2018, an average 450,000 new properties sold yearly; in the projections by Zillow, by the end of the 2030s, the Silver Tsunami nets 440,000 new properties yearly—a comparable difference.
As popular retiree states, Arizona and Florida have the highest inventory jumps, with boosts expected north of 30 percent. The biggest increases, according to Zillow: Tampa, where boomer-fueled inventory rises 15.2 percent by 2027 and 33.2 percent by 2037; Tucson, where inventory rises 14.8 percent by 2027 and 32.6 percent by 2037; and Miami, where inventory rises 15.2 percent by 2027 and 31.9 percent by 2037. In these areas, excess housing is predicted to rise.
“In many parts of the country, the Silver Tsunami will dampen new-home construction, as a flood of existing homes vacated by boomers comes on the market,” explains Jeff Tucker, economist for Zillow. “The places best situated to absorb that new inventory and still drive new construction are ones with booming job markets and plenty of buildable land, such as Austin, Houston, Salt Lake City and Raleigh.”
However, with inventory issues persisting, the boomer drop has the potential to relieve shortages. In October, existing-home inventory shrank to 3.9-months supply, compared to 4.3 months the prior year, the National Association of REALTORS® reported. On the new side, inventory tightened year-over-year, from 7.4 months to 5.3 months, Census figures show.
In addition to lacking supply—brought on by costs and labor and land shortages—accessibility and affordability concerns remain, including the need to retrofit properties. According to Harvard University Joint Center for Housing Studies projections, aged 65-79 households leap 49 percent between 2018 and 2028, and another 20 percent between 2028 and 2038. However, within that segment, just 10 percent completed home renovations to accommodate aging-in-place, and 46 percent had a mortgage, still, despite nearing retirement or retiring.
Changes in demographics inform the market, and drive home-buying and -selling, says Tucker. Among 60-and-older homeowners, for instance, the death of a partner often precedes selling, according to REALTORS® in the trenches.
“Demographic trends are critical to the real estate industry because the most common reasons for home purchases and sales are demographic life events, such as births, deaths, marriages and divorces,” says Tucker. “Along with job relocations, these factors drive the underlying demand for housing around the country, and at the population level they can actually be predicted fairly accurately.”
For more information, please visit www.zillow.com.
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.
Where will all these Boomers be moving to? They have to live somewhere.