The oldest of the baby boomers are reaching their seventies and are well into their retirement years. Between 1990 and 2010 this generation was at its peak family size and peak income. They defined an era of larger homes on big lots. Arthur C. Nelson, a University of Arizona researcher, claims that 77 percent of new construction in those two decades was due to this baby boomer demand. Because this generation has shaped economic trends in many ways over the last few decades, experts who study housing trends are wondering whether a major “senior sell-off” is coming in the 2020s.
They’re Staying Put Longer, But for How Long?
Many aging seniors who own homes now are choosing to stay where they are. They may be stuck waiting for their homes to climb beyond the post-recession years or they may not be able to find the right home for downsizing because of the inventory shortage. Or maybe they are still content with what they have. Nevertheless, at some point, the upkeep a larger sized single-family home with yard maintenance will be too inconvenient for this population.
Too Many Large Homes For Sale?
Because the day will come when so many seniors eventually need to move, a senior sell-off, that is, a major influx of homes on the market being sold by baby boomers, is being predicted by some as the next concern for a housing crisis. The bigger generation of home buyers now and in the next decade are millennials and their tastes are quite different. Most homes owned by boomers are in suburbs or exurbs (homes beyond suburban areas). Millennials are favoring smaller square footage and proximity to urban areas, though two-thirds of them will continue to buy in the suburbs. The other third desire older suburbs closer to the city or downtown. Seniors living in the more rural exurbs will likely face the toughest sales. The concern is that there will be too many large homes on the market (led by senior sellers) and not enough millennials to buy them.
The Sell Off May Happen Over the Course of Many Years
But the baby boomers represent a large population who are unlikely to sell all at the same time. Their transitional living options are varied (condos, smaller single family homes, retirement communities, etc.), which could help spread out sales over the course of time rather than in one big wave. While analysts may not agree on whether a senior sell off will materialize, they do tend to agree that more new housing will be needed for millennials to suit their needs. “Greener” homes, in-law suites, and modern layouts are already in demand. Local governments and developers need to plan accordingly now and in the next few years so that their regions aren’t stuck with too many larger homes later.