Throughout their lives, baby boomers have disrupted the housing market. When they were younger and moving into their first apartments, there was a massive apartment-building boom; when they began buying homes, the for-sale market tailored to their needs. The sheer size of their generation meant the housing market had to alter itself “to meet the demands of baby boomers,” Eric Finnigan, vice president of demographics for John Burns Research and Consulting, tells Fortune. And that’s been the story for several decades.
But there has been some anxiety about whether baby boomers are going to crash the housing market as they age and eventually pass away.
The phenomenon, dubbed a “silver tsunami,” refers to a supposed massive number of homes flooding onto the market, freed up by baby boomers. The number of baby boomers alive and the share that are homeowners has to decline at some point, but there’s been a fear that “given the sharp increase in how they came into the world, there’s going to be a sharp fall off in how they go out,” Finnigan says.
But that’s not the case; it’s not a cliff.
More than 9 million homes are expected to come onto the market in the next decade, as there will be nine million fewer baby-boomer-owned homes or households, according to Freddie Mac. But “the tsunami is more like a tide, bringing a gradual exit that will mostly be offset by new entrants,” it said. Nine million homes is a big number, but would only be roughly 9% of all owner-occupied homes, Finnigan says.
If you look at what happens to homes when people pass away, Finnigan’s team found, it takes about four deaths to equate to one home listed for sale. And not to be so grim, but when people pass away, their partner might hold onto their home, or it’s passed on to their children. So if there were to be three to three and a half million deaths per year for the next decade, then less than 1 million homes would be listed for sale, he says.
Still, the number of homes listed for sale due to deaths is gradually rising, and it has been since 2009, with a spike, of course, during the pandemic. It’ll continue to inch up as time goes on, but “it’s not a deluge,” Finnigan says. “It’s not a tidal wave of homes being listed for sale because of all these dying baby boomers.”
If you’re going to look at one statistic when it comes to the question of whether baby boomers will crash the housing market, consider this, he says: Homes listed for sale due to old-age deaths are expected to hit almost 800,000 by 2033—that’s less than 1% owner-occupied homes at the present moment. So whatever analogy it may be, whether it’s a trickle, a wave, or a ripple, the message is that homes freed up as baby boomers age won’t be overwhelming, and it’ll be offset by younger generations entering the housing market and an existing housing shortage.
By this logic, baby boomers won’t crash the housing market over the next decade; they’ll actually power it. Ever wonder why the housing sector didn’t crash last year? Home prices skyrocketed during the pandemic-fueled housing boom, mortgage rates more than doubled shortly after, so housing affordability deteriorated. Demand fell dramatically, which is why there was an expectation by some that housing prices would crash. That didn’t happen—and home prices went up instead. Baby boomers are a part of that; the generation largely kept the housing market afloat.
Boomers make up more than a third of all homeowners, Finnigan says, and more than half don’t have a mortgage. So baby boomers didn’t need to move. “There was no forced selling that happened, and the drop in demand was more than offset by a drop in supply, so it just kept prices high,” he says.
Baby boomers are the wealthiest generation on the planet by far, and they aren’t necessarily going anywhere anytime soon; plus, they’re aging in place. Boomers are remodeling and improving their current homes, not simply to age in place safely but also comfortably and luxuriously, Finnigan explains. That’s fueling the home-improvement market, and in some instances, the for-sale market too.
“They are still funding the purchase, and the renting, of their adult children’s homes as well,” he says.
In a sort of subphenomenon, boomers are buying homes or renting homes near their families, and more specifically their grandchildren. It’s happening in cities such as Charlotte, where a lot of younger people moved over the last five years or so, Finnigan says.
Superiority and dominance come with some tension though; everyone loves to talk about how baby boomers bought their homes for what feels like practically nothing and watched their values soar. That might be kind of true, but it obviously didn’t feel like nothing to them back then. Still, people born before 1970 hold about $107 trillion worth or wealth; those born in the 1950s and 1960s have seen their net worth more than double in the past decade. “Baby boomers have kind of ridden this wave of falling interest rates since the early ’80s, higher home values, more globalization so lower inflation,” Finnigan says. “Basically, they’ve done really well as a generation.”
Some people even want the housing market to crash so that home prices go down, that’s how unaffordable it’s become—reflective of the stark divisions within the housing market. But for it to crash, that would mean the economy would crash and unemployment would spike, which no one wants.
