Builders have struggled to conquer land scarcity and rising labor costs and materials. However a flood of homes will come on the market during the next 20 years as baby boomers age – enough to affect local economies in traditional retirement areas. The boomer generation, once 76 million strong in the U.S., dwarfed the 55 million Gen-Xers and 62 million millennials it preceded. Today, the 60-and-older generation owns approximately a third of America’s homes, and a new analysis by Zillow tries to show how their aging will impact the housing market.
Plenty of Homes Coming as Baby Boomers Age
The study predicts that a “Silver Tsunami” of sellers will build slowly as the amount of adults aged 60 or older pass away annually. However, an increase is anticipated in the 2020s and 2030s.
In the decade from 2007 to 2017, roughly 730,000 U.S. homes were released into the market annually by boomers aged 60 or older. From 2017 to 2027 and from 2027 to 2037, that number is set to increase to 920,000 and 1.17 million per year, respectively. This implies in excess of 27% of today’s owner-occupied homes will become available by 2037.
While almost all areas will experience the effects to some extent – between one-fifth and one-third of the current owner-occupied housing stock was impacted in every metro analyzed – the wave won’t hit simultaneously and won’t strike all markets equally.
Retirement hubs like Florida and Arizona will probably feel the sharpest impact. If demand erodes because fewer people decide to retire there in the coming years, those areas could end up with excess housing. Also heavily impacted are going to be regions like the Rust Belt, which saw younger people move away in recent decades, leaving older generations to make up a larger share of the population.
Some regions will likely be far less affected. Such as Salt Lake City, where a much smaller share of homeowners are in their golden years, as well as Atlanta, Austin, Dallas and Houston – all of which are vibrant but relatively inexpensive places that have a tendency to attract younger residents searching for an affordable option to expensive coastal cities.
Still, the differences in the share of homes released by boomers among metros are small compared to the differences within them. Palm Springs, for example, will notice 45% of its owner-occupied homes vacated by 2037, in comparison to 23.8% of the combined L.A.-Riverside metro area overall. El Mirage and Sun City figure to see nearly two-third of their homes available, compared with 28.2% of the Phoenix area at-large.
Housing released by the Silver Tsunami – in excess of 20 million homes showing up in the market through the mid-2030s – will offer a significant and sustained boost to supply, comparable to the fluctuations that new home construction accustomed to the 2000s boom-bust cycle. Whether this housing is appropriately located, priced and styled to meet future demand, however, will be a key factor in how it pairs with new construction to cure today’s housing shortage.
It seems likely, however, that the construction industry that the construction industry will, during the next 20 years, begin to put a greater emphasis on updating existing properties as opposed to building from the ground up.
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(all data current as of 8/7/2020)
Listing information deemed reliable but not guaranteed. Read full disclaimer.