According to research, the baby boomer generation (men and women born between 1946 and 1964) accounts for 46 million of today’s homeowners. The total combined value of the homes is $13.5 trillion. However, the baby boomers are aging, with some of the oldest members of this generation turning 70. People at this age usually leave the housing market in favor of a rental home or a senior care facility. Some also leave the housing market because of serious illness or death. As the baby boomers continue to age, we can’t help but wonder how the housing market will be affected.
Incoming Generational Housing Bubble?
Many people are beginning to fear that a “generational housing bubble” could be the consequence of baby boomers leaving the housing market. In this housing bubble, “[H]omeownership demand from the younger generations is insufficient to fill the void left by multitudes of departing older owners,” says Dowell Myers of the University of Southern California and Patrick Simmons of Fannie Mae.
How Many Homeowners Will Be Leaving the Market?
In order to put a number on this, researchers have looked back at the history of homeownership trends amongst older Americans (65 or older). For instance, between 2006 and 2016, a total of 9.2 million older Americans left the housing market. Based on this data, researchers predict that at least 10.5 million older homeowners will leave the market between 2016 and 2026.
What Can We Do To Soften the Impact of This?
Offering home improvement financing and social services to older homeowners who wish to stay in their home as they age could possibly soften the market impacts. In addition, offering sustainable financing options for first-time buyers could result in more of the millennial generation replacing the departing baby boomers in the housing market. Lastly, researchers believe that understanding immigration policies will be vital in knowing how well we will be able to fill this void in the housing market, as they “contribute substantially to homeownership demand.”
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