🤔 Will There Be a "Silver Tsunami"? 🌊
/THE HOUSING FORECAST
how much of an impact will aging Boomers have?
Is a "Silver Tsunami" Coming?🌊
As the Baby Boomer generation gracefully ages, their housing decisions are poised to shape the real estate landscape for years to come. With the youngest Boomers hitting 60 this year, and older Boomers reaching their golden years, the lifestyle choices of this generation will have a massive impact on the U.S. economy and the housing market.
As of 2022 there were 69 million Boomers, accounting for 21% of the U.S. population and 38% of total homeowner households. Boomers are over-represented in the homeowner demographic because homeownership rates tend to increase as households age, and historically gradually start to decline as households age beyond age 75 [chart below].
Given that the housing market is facing a shortage of available single-family homes, the housing decisions Boomers will make in the coming years will have an outsized impact. Some have warned of a “silver tsunami” as aging Boomers look to sell their homes, flooding the market with inventory. However, according to expert analysis, the tsunami will actually more akin to a tide -- bringing a gradual exit that new Millennial and Gen Z entrants will mostly offset. While historical data indicates declining homeownership rates as populations age, it's worth considering that modern improvements in health and life expectancy might influence these trends more positively, and that previously used models for "retention rates" may be too negative or dated to count on repeating in modern times.
Relatedly, while age will inevitably catch up with us all individually (which isn't a bad thing!), the population as a whole is renewed by younger generations. In addition to the natural growth from population, there is still a large latent demand for housing. Estimates as recent as last October show that there were as many as two million potential additional households in the Millennial generation. Along with increases from Gen Z, total housing demand over the next few years is likely to continue to increase even as Boomers exit the market. Over at least the next five years, experts expect the increase in young adult homeowner households to more than offset the decline in Boomer homeowner households.
In short: While "Silver Tsunami" is a catchy term for folks to be using these days in the hope of freeing pent-up housing inventory, realistically it will be more like tides and small waves, absorbed by younger generations who are eager to become homeowners.
