An estimated 10,000 baby boomers -- Americans born between 1946 and 1964 -- retire from the workforce each day. And while some will no doubt continue to own homes during their golden years, a large chunk will most likely look to sell as they age, whether due to financial issues, health-related necessity, or the desire to simply not be tied down to an expensive piece of property.
Almost 34% of owner-occupied homes in the U.S. are owned by residents 60 and older, reports Zillow. That number climbs to just over 55% when including residents 50 and over. And as these older Americans begin vacating their homes due to the reasons mentioned above or pass away, an estimated 20 million homes for sale could hit the market through the mid-2030s. And that presents a solid opportunity for new buyers.
Which markets will be most impacted by seniors aging out of their homes?
The aptly named Silver Tsunami will affect certain corners of the country more than others -- namely, retirement hotspots. Zillow has identified a number of cities where the housing market could be flooded with for-sale homes by 2037, and these top its list:
- Tampa, Florida
- Tucson, Arizona
- Miami, Florida
- Orlando, Florida
- Dayton, Ohio
- Knoxville, Tennessee
- Pittsburgh, Pennsylvania
- Cleveland, Ohio
- Albuquerque, New Mexico
- Greensboro, North Carolina
Not shocking, a number of major Florida cities take top billing -- cities that may hold appeal for younger buyers looking to settle in a relatively affordable corner of the country. (Remember, there's no state income tax in Florida.)
How will the Silver Tsunami impact U.S. real estate as a whole?
Once the Silver Tsunami is unleashed, there's going to be a huge amount of open inventory on the housing market. Between 2007 and 2017, about 730,000 homes came onto the market annually from people age 60 and over. Between 2017 and 2027, that number is projected to rise to 920,000. And between 2027 and 2037, it is expected to hit 1.17 million.
An uptick in supply is clearly a positive thing for buyers. For sellers, perhaps not as much. Economics 101 dictates that when a surplus occurs due to oversupply, pricing is generally adjusted downward to give products a competitive edge. The same could very well apply to the housing market, which means that the families who inherit those vacated homes once their loved ones age out of them or pass away may not get top dollar if they choose to sell.
But for younger buyers, a greater supply of homes -- especially moderately priced ones -- could make homeownership more attainable and affordable. It's no secret that the U.S. housing market on a whole is lacking in starter homes. In late 2018, such properties comprised just under 21% of available inventory. With more homes hitting the market in the coming decade or two, we may see an uptick in younger buyers, or moderate-income buyers, getting their share of the real estate action.
Of course, that begs the question: Will the Silver Tsunami kill the rental market in the cities it impacts the most? Maybe. That said, an influx of properties could be a boon to real estate investors, who can purchase those newly unloaded homes on the cheap, rent them out, and potentially make a killing.
Though the housing market won't feel the Silver Tsunami's impact for quite some time, it's a good thing for prospective buyers and investors to keep on their respective radars -- especially in areas of the country where the 50-plus population is prevalent.