Zillow is forecasting an end to housing inventory problems, but we may have to wait a while for it to happen.

The
company says it expects to see “flood of homes” coming onto the
market over the next twenty years. Those homes will primarily be
existing homes currently occupied by baby boomers, which will be sold
off once their owners pass away.

The Baby Boomer generation, once 76 million strong in the U.S., dwarfed the 55 million Gen-Xers and 62 million Millennials it immediately preceded. Today, about a third of America’s homes are owned by those 60 and older, and a new Zillow analysis shows the impact their aging will have on the housing market.

The
“Silver Tsunami”, as Zillow calls it, is estimated to hit in
earnest as the number of seniors aged 60 or older who pass away each
year rises during the 2020s and 2030s. In the decade from 2007 to
2017, roughly 730,000 U.S. homes were released into the market each
year by seniors aged 60 or older. From 2017 to 2027 and from 2027 to
2037 that number is set to rise to 920,000 and 1.17 million per year,
respectively. This means more than 27% of today’s owner-occupied
homes will become available by 2037.

While
virtually all areas will feel the effects to some degree – between
one-fifth and one-third of the current owner-occupied housing stock
was impacted in every metro analyzed – this wave won’t hit all at
once and won’t strike all markets equally.

Retirement
hubs like Florida and Arizona are likely to feel the sharpest impact.
If demand erodes because fewer people choose to retire there in the
coming years, those areas might end up with excess housing. Also
heavily impacted will 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 be far less affected. These include 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 tend to attract
younger residents looking for an affordable alternative to expensive
coastal cities.

Still,
the differences in the share of homes released by seniors among
metros are small compared to the differences within them. Palm
Springs, for example, will see 45% of its owner-occupied homes
vacated by 2037, compared with 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 – upwards of 20 million homes
hitting the market through the mid-2030s – will provide a
substantial and sustained boost to supply, comparable to the
fluctuations that new home construction experienced in the 2000s
boom-bust cycle. Whether this housing is appropriately located,
priced and styled to meet future demand will be an important factor
in how it pairs with new construction to alleviate today’s housing
shortage. It seems likely that the construction industry in the
coming two decades will place a greater emphasis than before on
updating existing properties.

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