Homeowners are older than the general population, while younger generations are falling behind due to affordability challenges. There has been some expectation of a so-called “silver tsunami,” i.e., when older homeowners begin listing their homes this will boost supply across the housing market.
Lisa Sturtevant, chief economist of Bright MLS and publisher of the Housing Economics with Lisa Sturtevant Substack, investigated how much stock housing market observers should place in this “tsunami.”
“Changing demographics do not offer a ‘quick fix,’ but other solutions won’t deliver relief in the near-term either. How much potential is there for demographic change to unlock supply?” posed Sturtevant.
Sturtevant defined the “silver tsunami” as mortgage-free 70-plus year old homeowners listing their homes. Currently, about one-in-five homeowners are 70 years old or older, while about 45% of homeowners are 60 years old, Sturtevant reports.
However, Sturtevant finds that this “tsunami” will be unevenly distributed throughout the country, as the majority of 70-plus homeowners are concentrated in relatively more affordable Midwest metro areas.
Pittsburgh, Pennsylvania, leads this with 19.5% of its owner-occupied housing held by homeowners aged 70-plus. Following behind Pittsburgh are other Midwest areas such as Buffalo, New York (17.8%); Cleveland, Ohio (16.9%); Detroit, Michigan (15.2%); and Milwaukee, Wisconsin (15.1%).
“For these markets, this upcoming wave of supply will likely just reinforce their status as the most accessible and affordable markets for homebuyers,” wrote Sturtevant. A few high-cost coastal markets with high numbers of senior homeowners could see an influx of housing stock from this “silver tsunami,” though.
Sturtevant specifically names Miami (19% senior homeowners) and Tampa, Florida (18.6%), as well as the New York City metro area (16.8%) and Providence, Rhode Island (15.2%), as areas likely to benefit from a “near-term increase” in housing stock “despite high median list prices.”
Regions that are unlikely to see their housing markets lifted by a Silver Tsunami are the Sun Belt and the Western markets, Sturtevant found.
“These expensive markets will likely remain starved for inventory, with little potential for demographically-driven improvements in affordability,” wrote Sturtevant, due to these high-cost Sun Belt regions’ low percentage of senior homeownership.
Large metro areas in these regions, from Austin, Texas, to Denver, Colorado, boast low homeownership rates among those aged 70-plus, only about one in 10 homes in these metro areas. (10.6% of homes in Austin, 10.3% in Denver, 10.2% in Atlanta, Georgia, 10.1% in Raleigh, North Carolina, etc.)
“Will demographics solve the homeownership affordability challenge? The answer is no, but the aging of the population will dramatically shift the housing market landscape in specific parts of the country,” said Sturtevant in conclusion.
For the full report, click here.
