This year was a particularly tough one for buyers looking to break into the housing market—and many blame the baby boomers for this year’s low inventory levels, saying that the boomers are holding on to their homes for too long, blocking already-struggling millennials and Gen Zers from homeownership.
For years, it seems, we’ve been waiting for the “silver tsunami” — the glut of housing inventory that would be triggered by bazillions of Baby Boomers downsizing. But it hasn’t really happened. One reason is that more “older” people seem quite happy to stay in their homes — in fact, to put more money into upgrading. We’ve reported on this phenomenon several times — for example, here, here and here. But the numbers are the numbers, and there seems little doubt that the sheer tonnage of downsizing older homeowners must eventually produce that tsunami we’ve all been expecting.
Is 2024 the year it happens?
As reported here on Yahoo Finance, some experts predict that the time has come, and that “downsizing boomers will bring extra inventory to the market starting next year. If true, that would be a major shift, unlocking the greatest portion of housing wealth held by any generation ($18 trillion, according to a Redfin report released in August.)”
One such expert is Meredith Whitney, whom Bloomberg calls “the oracle of Wall Street” because she accurately called the 2008 financial crisis. She expects the boom to start in 2024 and continue into 2025, pointing to an AARP survey that said 51% of people over age 50 “are set to downsize to smaller homes.” If so, that would bring over 30 million housing units to the market.
Not so fast, say other experts. They cite interest rates as a major factor. Most older homeowners enjoy much lower interest rates than are prevalent today — or have no mortgage at all. “After all, owners who are locked in at low mortgage rates are unlikely to want to trade up for a rate in the 6.6% to 8% range.”
But it isn’t just finances. There are important lifestyle factors in play — and that’s where the whole SuperAging mindset kicks in. The article quotes Mark Fleming, chief economist with Fortune 500 financial services company First American: “Baby boomers are staying in their homes longer. They’re wealthier. They’re healthier. They’re able to stay in place longer than generations past,” He agrees that the cycle of the Baby Boomer generation “aging out” will indeed happen. “But not yet.”
The article offers some other interesting insights into affordability, pointing out that even if there is some downsizing, the replacement may be another home — putting pressure on the supply of smaller homes and setting up a potential generational conflict with Millennials seeking those homes.
Will the “tsunami” start to hit this year? Our view is that age isn’t the only driver, and that the SuperAger segment of the market is in no unusual rush to downsize. What’s your opinion?