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What happens when the largest generation of home owning adults retires and downsizes their homes or rents rather than buying another home? Lets look at some numbers.
According to the Wall Street Journal, seniors are expected to vacate more homes than the total number of homes that sold in the previous two decades (during a housing boom). The number of homes owned by seniors (age 60 or over) that will be released into the market by the year 2037 will be roughly one in eight or roughly 21 million. Zillow predicts that 20 million homes could become available in the next 20 years. Boomers currently own a third of the homes in the U.S.
As large of a role as boomers play in the future of the real estate market, millennials also play a large role, after all, millennials will be buying these homes. According to Katie Warren, a writer for the Wall Street Journal, millennials just plain don’t want to buy boomer’s homes. Boomers like large homes with detailing, crown molding, located away from the hustle and bustle of the city. Millennials like clean lines, simple design and a location within walking distance of entertainment.
If you add all of this up, you see that we could have a market flooded with homes that no one wants to buy while cities grow more crowded and rental prices go through the roof. But hey, that’s looking at the glass half-empty. The real estate market is robust and adaptable. It’s unlikely the situation will be as dire as these predictions.
Here are a few reasons these dire predictions are not likely: there is currently a shortage of homes for sale (demand is greater than the supply) because baby boomers have been getting older for several years and staying in their homes longer and new construction has not kept up with demand. If anything, more boomers selling could help to balance the market. Also, as millennials age and their families grow, their housing needs will change to more closely match what is available and markets will adapt – changing demand. Locally, the average age is younger and families tend to be larger than the national average, so an increasing inventory from millennials vacating their homes could be less of a problem here.
- Jordan Jorgensen
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Photo by Avi Waxman on Unsplash
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