As the Baby Boomer generation steadily heads towards retirement, housing inventory and the real estate market on a whole will be transformed. With a flow of homes predicted to hit the market in the next ten years, it will improve the shortage of homes in several areas across the U.S.
According to figures published by Zillow, throughout the 2030s over 20 million homes (27.4 percent nationally) owned by Boomers will begin to populate the market as they retire or pass away.
Similarly, the Silent Generation (i.e., the generation before the boomers) has 14 million homes worth $13.5 trillion that are rapidly being put on the market.
Effect on Tampa
In Tampa, housing inventory is predicted to have one of the highest impacts among U.S. cities. Although Miami and Orlando were also high on the list, Zillow predicted that by 2037, 1 out of 3 homes owned by Boomers within Tampa’s metro area will be sold due to downsizing, death, or retirement.
With this increase in housing inventory, many prospective homeowners could take advantage of the influx of houses.
The anticipated increase in property inventory throughout the 2020s and 2030s is discussed in a mortality rate study conducted by the American Community Survey. Within the results, it states that throughout the two decades, the share of owner-occupied homes in Tampa put on the market will be over 30%, in comparison to the 18% of Salt Lake City, for example.
Retirement hubs such as Tampa, therefore, will face a rise in surplus homes, changing the landscape of the housing market for homebuyers.
Powerful Impact on the Economy and Housing Market
Since the 2012 recession, the real estate economy has been slowly recovering. But with 20 million homes owned by older Americans hitting the market in the next 20 years, the housing market is set to face a sustained and powerful boost.
Data collated from Zillow showcases that:
- 730,000 homes owned by people aged 60+ were released into the market between 2007 and 2017.
- 920,000 homes from 2017 to 2021 will be released into the market.
- 1.17 million homes from 2027 to 2037 will be released into the market.
Aligning with the above data, a study undertaken by researchers at Fannie Mae and the University of Southern California found that:
- Between 2026 and 2046, 13.1-14.6 million seniors will relinquish their homes.
- There has been an increase of 42% of seniors who have left their homes between 2009- 2019, with the number set to increase.
Despite the influx of homes being vacated, researchers are claiming that this could result in more houses than needed and a negative effect on property prices.
However, as the supply goes up, house prices will go down, benefiting the younger generation who are looking for more affordable housing.
Also, with more Millennials looking for single-family homes that offer more space for their money, this will open up possibilities for them.
Percentage of Homes Released into the Market Between 2027 and 2037
The American Community Survey discovered that by city, the wave of homes that will be released into the market between 2027 and 2037 will be the highest for the following:
- Tampa Bay: 15.2 percent to 33.2 percent.
- Tucson: 14.8 percent to 32.6 percent.
- Miami: 15.2 percent to 31.9 percent.
- Orlando: 14.4 percent to 31.9 percent.
- Daytona: 14.3 percent to 31.3 percent.
- Knoxville: 13.5 percent to 30.8 percent.
- Pittsburgh: 13.6 percent to 30.2 percent.
- Cleveland: 13.2 percent to 29.9 percent.
- Albuquerque: 12.7 percent to 29.6 percent.
- Greensboro: 13.3 percent to 29.5 percent.
How “Stagnant Cities” will be Affected
Alongside Tampa, cities such as Tucson and Miami also have a large population of older residents. Like Tampa, these stagnant cities are predicted to be greatly impacted by the flood of housing inventory.
Zillow reported that the main reason for this is because younger residents will move out of the city and seek houses and jobs elsewhere, resulting in more of the older generation populating homes in the city.
However, more affluent enclaves, such as Manhattan, are predicted to thrive as Baby Boomers retire and move to popular city neighborhoods. And although Tampa is undeniably popular with all generations, the impact that the boom will have is yet to be seen.
Benefits of the Housing Inventory Boom
Research in a Real Wealth Network article shows that since the recession, the population has rapidly grown by 20 million people.
The influx of homes brought by the death or retirement of the older generation will give more options to new homebuyers or those looking to move away from the heavily populated cities into single-family homes.
However, certain elements could impact this number, such as families renting out their properties and advances in technology.
Will the Boom Affect New Home Construction?
In a word, yes. Although the housing boom will cause a surplus of properties as Baby Boomers retire, a large portion of the younger generation are seeking newer properties within a short commute of their work and amenities.
Research suggests that despite the fact that new construction will not return to the production levels that it had before the Great Recession (1.2 million sales in 2005), it’s set to grow, indicated by the doubling of new homes sold between 2011 and 2018.
Despite the slow growth, the demand for newer properties could result in many of the empty houses left by Baby Boomers being demolished and replaced with new construction or staying on the market longer.
Marimark Realty is a full-service real estate company in Tampa, Florida. Our focus is on providing a personalized experience for both buyers and sellers of residential and commercial properties, as well as investors.
To begin the journey of purchasing or selling your home, or purchasing commercial or investment properties, contact us at your earliest convenience.