Baby Boomers Will Leave Housing Glut After Their Final Move

The baby boomers will be riding into the sunset in the next few decades, leaving behind a surplus of houses.

But a study by the Mortgage Bankers Association predicted the impact of the “Silver Tsunami” will be more glacial and easily absorbed by the market.

The 2020 Census showed that the baby boomers (born 1946 to 1964 and now ages 58 to 76), accounted for 22% of the U.S. population. By 2036, boomers will be 72 to 90 years old, and if the same age distribution held they would account for 10% of the population. By 2054 they would be 90 to 108, and account for less than 2% of the population.

The study by the MBA’s Research Institute for Housing America (RIHA), “Who Will Buy the Baby Boomers’ Homes When They Leave Them?,” found there were 32 million baby boomer homeowners in 2019, and the cohort is becoming a larger source of existing homes for sale — 4.4 million units annually over the next decade — as they move into retirement homes or die.

Gary V. Engelhardt, an economist at Syracuse University and the report’s author, said sustained homebuyer demand from population growth and younger-generation households should lead to minimal excess housing supply and have no measurable reduction in home prices.

“Aging and mortality are glacial and largely predictable,” Engelhardt said. “Based purely on changing demographics and population growth, there is enough homebuyer demand to meet most of the existing inventory that will come onto the market over the next decade and beyond from older homeowners.”

Engelhardt projected there will be a modest excess of homes for sale — around a quarter-million units annually through 2032 – and no measurable decline in home prices. Most of the adjustment to the excess inventory will be through a reduction in housing starts and completions, with some softness in the rental market.

Edward Seiler, the institute’s executive director and the MBA’s assistant vice president for housing economics, said the study shows a detailed picture of America’s aging population and its effect on the housing market.

“The impact from baby boomers exiting their homes is not insignificant but will happen over a few decades without significantly disrupting the housing market,” Seiler said.

Findings from the report included:

• “Prior to the COVID-19 pandemic, boomer homeowners numbered 32 million and represented almost 41% of all homeowners.”
• “The baby boomers eventually will die. Their housing will become available for others or other uses.”
• “Some estimates suggest that one-quarter of current owner-occupied homes will come on the market by 2040, as older Americans transition out of owner-occupied housing and eventually die.”
• “Projected deaths rise steadily as the baby boomers age and eventually die, then plateau around 2045. By 2060, the tail end of the baby boom will be 95 or older.”
• “Overall, housing supply and demand shifts from changing demographics are slow moving and highly predictable, which suggests that there will not be measurable effects on house price growth from population aging and mortality.”
• “Over the next decade … most of the adjustment to aging and mortality will be through a reduction in the growth of new housing and some softness in the rental market.”