- Don’t count on older homeowners to boost housing supply, Zillow said.
- Most live in housing markets that are already more affordable, where demand is lower.
- If empty-nesters decide to sell in these areas, it’ won’t impact prices as many hope.
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Don’t expect a wave of home sales by older Americans to fix the affordability crisis facing US buyers.
While there’s been growing optimism from some economists and housing experts about a wave of housing supply as empty-nesters downsize and add inventory to the market, Zillow isn’t so sure.
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“A flood of currently owner-occupied homes hitting the market as their current owners pass away or otherwise vacate their homes will not solve housing affordability challenges, especially in high demand housing markets,” the real-estate firm said.
Prospective buyers can blame demographics.
To impact housing prices, Zillow said that an increase in housing inventory would need to be concentrated in areas with the biggest shortages. A lack of homes for sale has relentlessly driven home prices up in recent years, and a lack of selling has forced buyers to rely on new construction.
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But if empty-nesters do decide to sell, it’s likely to impact inventory where housing is already affordable, in areas where supply is higher and demand isn’t as strong among younger buyers.
“Young workers choose to live near productive job centers and on the coasts, areas that have much lower populations of older retired individuals holding back housing supply in the first place,” Zillow said.
If older homeowners do lead a “silver tsunami” of housing sales, Pittsburgh, New Orleans, Detroit, Buffalo, and Cleveland are among the markets that stand to see the biggest jump in inventory. However, these areas are already more affordable than their coastal counterparts, limiting the impact on prices.
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Meanwhile, in-demand metros such as Austin, Seattle, and Denver have the highest concentration of households led by individuals under 44 years old.
A September survey from Clever also questioned the assumption that older generations will move out anytime soon.
Baby boomers, who own over a third of the national market, were largely unwilling to sell their current homes, and 54% of surveyed boomer households said they planned to stay put for life.
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But more recently, veteran forecaster Meredith Whitney suggested that baby boomers could start selling once elevated housing costs and mortgage rates cool down. If a thawing market sparks the expected silver tsunami, she predicts home prices could drop 10%-20%.