Baby boomers have disrupted the housing market all their lives. When they were young and moved into their first apartments, there was a huge apartment building boom. When they started buying homes, the subdivision market was tailored to their needs. Eric Finnigan, vice president of demographics at John Burns Research and Consulting, said the housing market will transform itself “to meet the demands of baby boomers” because their generation is so large. He says it was necessary. luck. And it's a story that's been going on for decades.
However, as the baby boomer generation ages, there are fears that the housing market will collapse and that they will eventually die.
This phenomenon, known as the “silver tsunami,” refers to the huge number of homes released by baby boomers that are expected to flood the market. Although the number of living baby boomers and the proportion of homeowners will have to decline at some point, “given the exponential increase in the ways in which they enter the world, the way they live their subsequent lives will dramatically increase.” There are concerns that this will decrease. You’re out,” Finnigan said.
But that's not the case. It's not a cliff.
According to Freddie Mac, more than 9 million homes are expected to come onto the market over the next 10 years, as baby boomers own 9 million fewer homes and households. But “the tsunami will be more like a tide, leading to gradual exits, most of which will be offset by new entrants,” the paper said. While 9 million units is a big number, it represents only about 9% of all owner-occupied housing, Finnigan said.
Looking at what happens to homes when people die, Finnigan's team found that it takes about four deaths for one home to be listed for sale. . So over the next 10 years, he says, even if there were 3 million to 3.5 million deaths a year, there would be fewer than 1 million homes for sale. Still, the number of homes for sale due to deaths has been gradually increasing, the first time since 2009, and of course spiked during the pandemic. It will gradually grow in size over time, but “it's not a deluge,” Finnigan said. “It's not like the baby boomers are dying and there's not a ton of homes going up for sale.”
If you're going to consider one static number on the question of whether baby boomers will collapse the housing market, consider this, he says: Older people put up for sale due to death By 2033, the number of homes in the country is expected to reach nearly 800,000 – less than 1% are currently owned. Less harshly, when a person dies, their partner may continue to keep the house, or it may be passed on to their children. So whether it's a trickle, a wave, a ripple, whatever the analogy is, the message is that the housing that will be released as baby boomers age is overwhelming. rather, it will be offset by younger generations entering the housing market. Existing housing shortage.
According to this logic, baby boomers will not collapse the housing market in the next decade. They actually provide power. Have you ever wondered why the housing sector didn't crash last year? Home prices skyrocketed during the pandemic-driven housing boom, and mortgage rates more than doubled shortly afterward, leading to a decline in housing affordability. prices have worsened. Some predicted that house prices would plummet as demand fell dramatically. That didn't happen and instead home prices rose. The baby boomer generation is one of them. This generation primarily supported the survival of the housing market.
Baby boomers make up more than a third of all homeowners, and more than half don't have a mortgage, Finnigan said. Therefore, the baby boomer generation did not have to immigrate. “There were no forced sales, and the drop in demand was more than offset by the drop in supply, so prices just stayed high,” he says.
Baby boomers are the wealthiest generation on the planet, but they aren't going anywhere anytime soon. Additionally, they are aging. Finnigan said baby boomers are remodeling and improving their current homes not only to age them out safely, but also to provide comfort and luxury. That's fueling the home improvement market and, in some cases, the condominium market as well.
“They also continue to fund the purchase and rental of homes for their adult children,” he says.
As a sort of side effect, boomers are buying or renting homes closer to their families, and more specifically their grandchildren. Something similar is happening in cities like Charlotte, where many young people have moved in the past five years or so, Finnigan said.
However, there is some tension between dominance and superiority. Everyone loves to talk about how baby boomers bought homes for next to nothing and watched their values soar. That may be true in a sense, but it clearly didn't feel like anything to them at the time. Still, people born before 1970 have a value or wealth of about $107 trillion. Born in the 1950s and 1960s, his net worth has more than doubled in the past decade. “Baby boomers have kind of been riding the wave of lower interest rates, higher home values and lower inflation since the early '80s due to increased globalization,” Finnigan says. “Basically, they've done very well as a generation.”
Some even wish for the housing market to crash and house prices to fall, but that reflects the severe divisions within the housing market that are making house prices less affordable. But its collapse would mean the economy would collapse and unemployment would skyrocket, which no one wants.
