The Baby Boomer generation, a demographic wave born roughly between 1946 and 1964, has always had a significant impact on the real estate industry. They are now entering retirement age, and due to this group's large size, they have specific housing needs and preferences that must be addressed. This forthcoming phenomenon is often called the "Silver Tsunami" because it implies that it will likely reshape real estate markets for one final time. As a real estate professional, it is critical to stay up-to-date on these developments and adjust your strategies to meet the needs of this massive demographic.
A Wave of Inventory
Many experts predict that the aging baby boomer population in the US will lead to an increase in the number of houses available for sale.
Currently, a significant number of single-family homes are owned by boomers. As they age, some may prefer to downsize from their larger family homes to smaller accommodations or age-restricted communities.
According to Freddie Mac, this increase in available properties is estimated to be around 9 million by 2035. This could cause a shift in the balance of supply and demand, possibly leading to a buyer's market in certain areas.
Redfin reports that the silver tsunami may not be as impactful as expected.
Many boomers opt to "age in place," meaning they prefer to stay in their current homes rather than move to retirement communities or other cities. This trend can be attributed to the financial security provided by their accumulated equity over the years. Additionally, their emotional attachment to their homes and communities is a decisive factor in their decision-making process.
The Rise of Senior-Friendly Housing
As more and more seniors prefer to age in place, the demand for suitable housing modifications is rising.
To ensure that older adults with mobility limitations can comfortably live in their homes, they may choose to install ramps, wider doorways, and grab bars to make their residences more accessible.
The Allure of the Sun
As the boomers age, some individuals might choose to stay in their current homes, while others may prefer to relocate to warmer regions and established retirement communities.
A shift in preferences could lead to a rise in demand for retirement communities in states such as Arizona, California, and Florida, possibly resulting in higher prices and increased development in those areas.
A Market for All Ages
Recognizing that the baby boomer generation is not a homogenous group is important.
The boomer demographic has different financial situations, healthcare requirements, and lifestyle preferences.
The real estate industry must adjust to cater to this diverse population. The adjustments may include building smaller, low-maintenance properties and creating active adult communities that provide a variety of amenities and social activities.
The Impact on Younger Generations
The Silver Tsunami could present opportunities for younger generations struggling to enter the housing market.
An increase in available properties and potential price adjustments might make it easier to achieve homeownership.
Competition for starter homes could intensify if downsizing baby boomers target the same segment as the young.
Estimates
Predictions have been made about the number of homes that will become available due to aging. Zillow has estimated that by 2037, more than 20 million homes will be put up for sale.
Freddie Mac, a government-sponsored mortgage enterprise, predicts there will be around 9 million fewer baby boomer homeowner households by 2035.
It's important to note that not all baby boomers will leave vacant homes as they age. Many may downsize to smaller homes, increasing the available inventory without creating new listings.
Other boomers may prefer to stay in their current homes as they age, which could offset some potential increase in listings.
The real estate industry is expected to experience changes from the Silver Tsunami. While the number of available properties may increase, the full impact on the market is still being determined. Factors such as aging-in-place trends and the rise of senior-friendly housing will significantly affect the market. It is essential to acknowledge the diverse needs and preferences within the Boomer demographic and adapt the market to provide various housing options that cater to all generations.
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(c) 2024 Jeff Sorg
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