As the residential construction industry celebrates National Homeownership Month in June, a recent NAHB analysis found that fewer older home owners are choosing to transition out of their homes or downsize, a trend known as the “silver tsunami.” This shift is limiting the expected wave of housing stock released, affecting the availability of homes for new buyers. A majority (79%) of the members of the Boomer and Silent generation, U.S. adults 65 years or older, are home owners and currently own more than a third (34%) of owner-occupied housing units in the U.S.
“As older Americans stay in their homes longer, the silver tsunami phenomenon won’t solve the housing shortage on its own; therefore, expanding the housing supply becomes more urgent, not less,” said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio. “We must create pathways for all generations who aspire to achieve homeownership by reducing barriers to housing attainability.”
An NAHB analysis found that the “silver tsunami,” which generally releases housing stock, varies sharply by region. Coastal metros and popular retirement areas have both high shares of older households and a lower number of young adult households. NAHB also found that older home owners tend to live in some of the most supply-constrained markets.
Another complicating factor to the silver tsunami narrative is the age of the housing stock held by older home owners. In the top 100 metro areas, markets with larger shares of older home owners also tend to have older housing stock. These homes are unlikely to be direct substitutes for newer construction, as when they enter the market, many may require significant renovation and, in some cases, redevelopment.
Several market realities also diminish the silver tsunami effect. Approximately two-thirds (66%) of Baby Boomers are mortgage-free home owners, reducing the financial pressure to sell. At the same time, rising costs for nursing homes and assisted living further discourage mobility. As a result, this cohort will opt at higher rates than prior generations to remain in their homes and invest in age-in-place modifications.
“Even if some homes are eventually released by older owners, they won’t meet the needs of growing metros without additional construction,” added Owens.
To urge lawmakers to implement policies to boost the nation’s housing supply, builders from across the country will meet with lawmakers on Capitol Hill in Washington, D.C., on June 10. According to the latest NAHB/Wells Fargo Housing Market Index (HMI), nearly a third (32%) of home buyers cut home prices in May to help families achieve homeownership.