Baby boomers who are aging and passing on over the next 10 years are not expected to help boost housing supply as much as originally thought. In fact, during that time, excess demand for housing will increase by about 25 million units each year, an update to a 2022 Mortgage Bankers Association report found.
That is a turnaround from the original study by the MBA-affiliated Research Institute for Housing America, which had concluded that more than 4 million existing homes from the aging and mortality of older homeowners would come on to the market each year through 2032.
At that time, sustained homebuyer demand from population growth and younger-generation households
The most recent report is also a far cry
The first RHIA study used data on housing, aging, and mortality up through 2015 and 2016. The update included an additional five years of statistics.
Since that 2015 study, a sizable increase in the homeownership rate for those over 70 has taken place. Meanwhile, older Americans are now holding on to their homes for a longer period of time, affected not just
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"It is evident that older households are aging in place, leading to updated predictions that show that there will be no excess supply of homes to the markets from older Americans moving or dying over the next decade," Edward Seiler, RIHA executive director, and the MBA's associate vice president, housing economics, said in a press release.
The study noted that prior to 2015, typical homeownership patterns indicated those residences would have been sold, rather than held on to.
"While this will raise the supply of existing homes to the market more in the out years, it creates unmet demand now and allows more time for long-run demographic trends that are favorable to demand to take hold," the updated study, again authored by Gary Engelhardt, a professor at Syracuse University, said. "On net, the demand-side factors will dominate over the next decade, leading to demographically driven excess demand for homes currently owned by older Americans."
The number of American homeowners between the ages of 65 and 70 increased by almost 2 million in 2022 over 2015. The cumulative number of additional homeowners rapidly increases to a peak of about 7 million more by age 85.
The demographic trends in play mean not only that the U.S. has an increase of older residents, but that those who are owner-occupants of their properties are staying put for longer.
"It is projected that there will be just over 8 million homes supplied by older Americans as they age and die, rising to about 9 million over the next decade, of which approximately 1 million will be due to the death of older Americans," Engelhardt said. "This is almost double that projected in the original report due to the sizable rise in homeownership rates."
But fewer existing homes have been placed for sale since 2015, properties that would have been marketed if age-ownership patterns had remained at the long-run levels of 2014. The divergence from historical norms contributed to the inventory shortage that has plagued the market in recent years.
Thus on the demand side, the current level of 8 million homes will increase over the next decade to approximately 11 million, which Engelhardt said was also almost double from the original report.
The net effect of those trends is that over the next decade, excess demand for homes for sale will arise as older homeowners age and die. "Overall, there will be no demographic dividend to the net supply of existing homes," Engelhardt said.
