Zillow analysts have reported that between 2017 and 2027, over 900,000 baby boomer-owned homes will go on the market every year, and that will increase to 1.17 million units of housing inventory from 2027 to 2037.
That means approximately 20 million properties, (or 27 percent of currently owner-occupied houses) will flood the market, as the elder generation passes on or gives up their homes. Arizona and Florida, the two states that have the most retired residents, will experience the highest inventory jumps, expected to top 30 percent.
Zillow’s Jeff Tucker explains, “In many parts of the country, the Silver Tsunami will dampen new-home construction, as a flood of existing homes vacated by boomers comes on the market. The places best situated to absorb that new inventory and still drive new construction are ones with booming job markets and plenty of buildable land.”
The National Association of Realtors says that this anticipated flood of existing housing coming up for sale should provide a remedy for continuing housing shortages, as existing-home inventory shrank to 3.9-months supply in October, compared to 4.3 months the prior year.
One unknown factor will be if the nation’s builders will be able to keep up with demand due to costs, labor, and land shortages. Access to affordable new home inventory could be affected, including the need to retrofit and renovate older properties.
Another unknown factor will be the rate at which the Boomer Echo generation will enter the market for their own new – homes. Tucker says, “Demographic trends are critical to the real estate industry because the most common reasons for home purchases and sales are demographic life events, such as births, deaths, marriages, and divorces. Along with job relocations, these factors drive the underlying demand for housing around the country, and at the population level they can actually be predicted fairly accurately.”
Maryland – and Baltimore in particular – will be affected by these trends. While the proximity to the nation’s capital usually gives our region a reliably strong job market, affordable and available land will be an issue. This promises to potentially solve Baltimore’s problems on the crumbling West Side and decaying inner suburbs, as housing with existing infrastructure will be attractive for easy redevelopment.
The resulting dislocation of poorer residents will, however, create issues for government policy makers.