More baby boomers who own homes are putting off selling as they age, a significant factor in the limited number of existing homes for sale in the United States.
A previously anticipated “silver tsunami” of homes for sale by older Americans hasn’t materialized, according to an updated report from the research arm of the Mortgage Bankers Association. That flood of homes may still occur, but not in the next decade, the report found.
People born between 1946 and 1964, known as the baby boomer generation, made up 41% of all homeowners as of 2022 when the MBA’s original report was published. Using U.S. Census data up to 2016, the report projected at the time an annual supply of 250,000 homes coming on the market as boomers sell their homes or pass away. But the pattern of people selling at a certain age changed between 2016 and 2021. Now, a widening gap between supply and demand for older residents’ homes is expected, reaching nearly 2 million by 2035.
“With more older people aging in place, and the older homeownership rate increasing, there will be excess demand for these homes," said Edward Seiler, executive director of the MBA’s Research Institute for Housing America, in an email. "This means that there is unmet demand now and over the next decade and exacerbates the need to increase the supply of housing units.”
It's unclear why older people are staying put, but there are some possible explanations. The report points to higher retirement incomes among baby boomers, higher capital gains tax liability from sales and motives related to passing assets on through bequests. Another factor is high mortgage rates over the past two years. The report uses data through 2021, so it doesn’t consider how the pandemic and high rates since then have affected the housing market.
The supply of existing single-family homes and condos for sale has hovered around 4 million for the past year, according to data from the National Association of Realtors. That figure hit 6.6 million during the pandemic in January 2021, then tumbled as average mortgage rates rose past 7%.