Boomers Are Aging Out of Their Homes: Will This Finally Cause Home Prices To Drop?
Written by
Gabrielle Olya
Edited by
Zuri Anderson
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Some experts predict that we are approaching a “silver tsunami” in the real estate market.
“The ‘silver tsunami’ is the idea that baby boomers will soon be selling their homes en masse,” said Jenna Stauffer, broker and global real estate advisor at Sotheby’s International Realty. “While this has been anticipated for some time, I think it will be more of a gradual tide than a sudden wave, with homes becoming available over a longer period.”
Stauffer noted that many boomers are not in any rush to leave their homes.
“Many boomers are holding onto mortgages with rates as low as 2 to 3%, something they’ve never seen before,” she said. “This low rate reduces their incentive to sell, so it’s likely many will hold onto their homes as long as possible.”
However, if and when they do sell their homes, this will add to the supply available to younger generations — but will it cause home prices to drop?
Aging Boomers and the Housing Market
Stauffer believes the added supply caused by the “silver tsunami” will be balanced out by increased demand from younger generations, which means it won’t have any drastic effect on prices.
“While they may gradually add to inventory, the slow pace should allow demand from millennials and Gen Z to keep up,” she said. “The U.S. housing market is currently facing a shortage, but there’s also a lot of pent-up demand.
“Over the last few years, affordability challenges have prevented many millennials and Gen Z buyers from entering the market, impacting the ‘move-up’ segment,” Stauffer continued. “However, as the market cycles, these younger buyers are expected to fill the demand as boomers gradually sell.”
Because she predicts boomers will be selling their homes in waves rather than in a “tsunami,” she doesn’t believe this will tip the scales enough to make it a buyers’ market.
“The housing market is slow-moving and cyclical, so while the silver tsunami may influence inventory over time, a steady demand from younger buyers will likely balance it out,” Stauffer said.
Some Home Prices Could Increase
As boomers age out of their current homes, they could be looking to buy smaller, turnkey homes, particularly in places with thriving retirement communities. This increased demand for specific properties could actually drive some home prices higher.
“Any time demand outpaces supply, upward pressure on prices is almost guaranteed,” Stauffer said. “If builders can’t keep pace, we’re likely to see rising prices for the types of homes boomers want — smaller, turnkey properties that are accessible, low-maintenance and in safe, desirable communities that support easy living. This demand could especially impact prices in warmer climates or popular retirement spots.”
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