Don’t bet on a ‘silver tsunami’ of boomers selling their houses

From falling mortgage rates to slipping home prices, things are starting to look a bit more upbeat for younger homebuyers.

But one generation of owners is standing in the way of things getting too sunny. Most baby boomers, who own well over a third of the housing market, are unwilling to sell.

That’s according to a survey from Clever, a real estate firm that asked older Americans about their plans to move. 54% of these households indicated they would remain at their current homes for life, while 15% cited plans to sell in the next five years.

The finding dents hopes for a quick turnaround in housing supply. A lack of homes has been a leading culprit for high prices nationwide, made worse by the fact that homeowners have stayed put amid high borrowing costs.

Although cooling mortgage rates were forecast to undo this, existing home sales in August slumped to their lowest since May 2020. With total homes for sale at 1.33 million at the end of July, inventory stands well below the six-month supply that indicates a balanced market, Realtor.com said.

“Any additional pinch on the supply of existing homes that results from older generations holding on to them for longer would be unwelcome news,” Realtor.com’s senior economist Joel Berner said in a report about Clever’s survey.

These trends run counter to what experts predicted: older Americans were supposed to drive a supply boom, some have said.

For instance, famed analyst Meredith Whitney outlined that aging households would start downsizing quicker. This so-called “silver tsunami” would help bring prices down, she said last year.

In 2019 Zillow projected that over a quarter of owned homes would hit the market on account of boomers turning older.

Not according to Clever’s findings.

Most surveyed cited plans to remain in place due to financial security, while a quarter said they could not purchase a new property. Lifestyle needs and emotional attachments also factored into these decisions.

The survey parallels a similar report from Redfin earlier this year, which also found that boomer households were more entrenched than expected.

With limited existing homes on the market, pressure has fallen on new construction. According to the US Commerce Department, single-family housing starts surged 15.8% in August. However, rising supply may restrict construction momentum through the coming months, as suggested by last month’s moderate rise in building permits.