Baby Boomers Downsizing: Will it Impact 2024 Housing Prices?

Ever come across the term "Silver Tsunami" and found yourself curious about its significance? It's been a topic of considerable online discussion lately. Let's explore its meaning and understand why it may not have a profound impact on the housing market.

What Does Silver Tsunami Mean?

In a recent HousingWire article, it is referred to as:

". . . a term used informally to describe aging Americans adjusting their housing arrangements to cater to the challenges of aging . . ."

The idea is that as the baby boomer generation ages, a considerable portion is expected to embark on downsizing their residences. Given the substantial size of this generation, if such transitions occur en masse, it could potentially influence the housing market by leading to a notable increase in the availability of larger homes for sale. This surge in homes entering the market would alter the equilibrium of supply and demand, among other consequences.

Will it materialize? And if it does, when can we expect it to happen?

Why the Housing Market in 2024 Won't Experience a Significant Impact

According to experts, a silver tsunami hasn't occurred yet, and it's unlikely to happen in the near future. As mentioned in the same HousingWire article:

"...the transformative impact of the silver tsunami on the U.S. housing market has not manifested significantly, and there are few expectations for it to do so in the near future."

One compelling factor is that a substantial number of baby boomers are reluctant to relocate. According to data from the AARP, more than half of surveyed adults aged 65 and above intend to remain in their current homes and age in place, as opposed to moving (refer to the chart below):

Clearly, not every baby boomer intends to sell or relocate, and even among those who do, it won't happen simultaneously. Instead, the process will be gradual, unfolding slowly over time. As noted by Mark Fleming, Chief Economist at First American:

"Demographics don't move like a tsunami. The baby boomer generation spans almost two decades of births, implying that it will take approximately two decades for them to progress through the demographic shift."

Bottom Line

If you're concerned about a Silver Tsunami causing turbulence in the housing market, fear not. The effects of baby boomers relocating will be a slow and gradual process over many years, as summarized by Fleming.

“Demographic trends, they don't tsunami. They trickle.”