The vast influence of baby boomers on the American housing market is undeniable, with their ownership of nearly $19 trillion worth of real estate dwarfing that of millennials and Gen Xers. As this generation, often referred to as the “Me” generation, ages, a looming question arises: What happens to the housing market when boomers pass away or transition into nursing homes?
Projections from the Census Bureau suggest that by 2040, the population of 80-plus-year-olds will more than double, triggering a significant shift in the housing landscape. Economists have coined the term “silver tsunami” to describe the potential wave of available homes as aging boomers vacate their residences. This surge in supply could, in theory, lead to reduced home prices and create opportunities for younger generations, particularly Gen Z.
As the boomers exit the stage, Gen Z is poised to take the lead in the housing market. With most Gen Zers entering their prime homebuying years, the timing aligns perfectly for them to capitalize on the increased supply. Many in their later years, are downsizing, offering a surplus of starter homes—something in high demand and limited supply in today’s housing market.
Gains for Millenials Too:
While millennials may also benefit, they will be beyond the typical age for first-time buyers, facing the challenges of a competitive housing market and potential costly updates to aging boomer-owned houses.
The impending shift raises a critical question: Can Gen Z navigate the housing market reshuffle and emerge with a winning hand? Despite attempts to forecast real estate’s unpredictable nature, demographic patterns provide a more certain trajectory. Historical data suggests that the exodus of boomers from their homes is anticipated to accelerate around 2030, with the bulk of the generation aging out of the market between 2030 and 2040.
The numbers are staggering, with boomers currently claiming 41.6% of the country’s real estate wealth. As of 2022, 79% of baby boomers owned their homes, compared to 52% of millennials and just over 26% of adult Gen Zers. Analysts predict that more than 20 million homes, constituting over a quarter of the nation’s owner-occupied residences, could hit the market in the next two decades.
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Baby Boomers Will Change the Real Estate Market?
Whether the impending wave of housing supply is akin to a tsunami or a more gradual glacial shift remains uncertain. Yet, one thing is clear: The real estate landscape, shaped significantly by baby boomers, is on the brink of another transformation, and Gen Z stands at the forefront of this evolutionary moment. As the “silver tsunami” approaches, the dynamics of the housing market are set for a generational handover, with the winning cards potentially landing in the hands of the emerging Gen Z cohort.
