A ‘silver tsunami’ of boomer home sales won’t fix the housing affordability crisis, Zillow says

Don’t expect a wave of home sales by older Americans to fix the affordability crisis facing US buyers.

While some economists and housing experts are increasingly optimistic about a wave of housing supply as empty nesters downsize and add inventory to the market, Zillow isn’t so sure.

“A flood of currently owner-occupied homes hitting the market as their current owners pass away or otherwise vacate their homes will not solve housing affordability challenges, especially in high demand housing markets,” the real-estate firm said last week.

Prospective buyers can blame demographics.

Zillow argued that to affect housing prices, an increase in housing inventory would need to be concentrated in areas with the biggest shortages. A lack of homes for sale has relentlessly driven home prices up in recent years, and a lack of selling has forced buyers to rely on new construction.

But it said that empty nesters’ decisions to sell would most likely affect inventory where housing is already affordable, in areas where supply is higher and demand isn’t as strong among younger buyers.

“Young workers choose to live near productive job centers and on the coasts, areas that have much lower populations of older retired individuals holding back housing supply in the first place,” Zillow said.

Zillow said that if older homeowners were to lead a “silver tsunami” of housing sales, the markets where inventory could increase the most are Pittsburgh; New Orleans; Detroit; Buffalo, New York; and Cleveland. But these areas are already more affordable than bigger coastal cities.

Meanwhile, Zillow said, in-demand metros such as Austin, Seattle, and Denver have high concentrations of households led by people under 44.

A July survey of baby boomers by the real-estate website Clever also questioned the assumption that older generations will move out soon. Respondents largely indicated they were unwilling to sell their homes, and 54% said they planned to stay put for life.

More recently, the veteran forecaster Meredith Whitney suggested that baby boomers could start selling once elevated housing costs and mortgage rates cool. She predicted that if a thawing market sparked a silver tsunami, home prices could drop by 10% to 20%.