Discussions surrounding a potential "silver tsunami" - an increase in housing supply resulting from baby boomers downsizing or passing away - have resurfaced, fueled by financial analyst Meredith Whitney.
Known for accurately predicting the 2007-2008 financial crisis, Whitney suggested at a recent conference that this wave could impact the housing market as early as this year.
The notion of a "silver tsunami" has been a topic for years, with Zillow's 2019 report estimating over 20 million homes entering the market by 2037 due to aging baby boomers. However, Whitney suggests the figure might be closer to 30 million.
While the prospect of increased housing supply is welcomed to address the current demand-supply imbalance, experts believe the impact on the housing market might be more gradual than anticipated. AARP indicates that 80% of individuals aged 50 or older own homes, and as they downsize or pass away, more properties are expected to enter the market.
Matt Dunbar, Senior Vice President at Churchill Mortgage, notes that the downsizing phase of this generation will inject a substantial volume of properties into the housing market. This influx is crucial as the housing market currently faces a shortage of about 5.5 million units, leading to elevated prices and affordability challenges for buyers.
Mark Fleming, Chief Economist at First American Financial Corporation, emphasizes that the process will unfold gradually over many years due to the extended span of the baby boomer generation, covering almost two decades. Furthermore, not all boomers will sell their homes; some may pass them down to family members.
Real estate broker Aaron Buchbinder points out that a significant portion of clients inherit their parents' properties, leading to decisions to keep the homes for family or vacation purposes unless a financial need arises.
While the impact on the broader American housing market may be modest, with an estimated 250,000 housing units per year, certain markets could experience more pronounced effects. Boomer hotspots in Florida, Arizona, and other areas might witness a surplus of supply, potentially causing price declines. Zillow's report highlights cities like Tampa, Miami, Orlando, Tucson, and Dayton as areas expecting substantial boomer-related supply increases by 2037.
In other markets, the shift could influence the availability and type of housing, particularly in coveted locations where aging baby boomers own desirable properties. This transition may present unique opportunities for buyers, but overall, the "silver tsunami" appears to be more of a gradual wave than an immediate, overwhelming force.
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