Downsizing baby boomers who are leaving homeownership behind may send shock waves throughout the real estate market, two new studies warn. “Homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners,” according to Fannie Mae’s Economic Strategic Research group. A separate study by the Stephen S. Fuller Institute at George Mason University says the significant number of older owners in relatively large homes in the Washington, D.C., market may lead to a “baby boomer sell-off” that could be mirrored in others parts of the country.
Baby boomers—those born between 1946 and 1964—own two in five homes in the country. The generations following them occupy only about 14 million homes.
Eventually, health or other issues will force baby boomers to move. Between 2016 and 2026, as many as 11.9 million older owners will end their homeownership status, according to estimates by Fannie Mae. From 2026 to 2036, another 13.1 million to 14.6 million will move as well.
Researchers in the Fannie study warn that this generational unloading of homes could be “negative for the home sales market.” Upcoming generations may not have the desire or be unable financially to buy the homes baby boomer are leaving behind. But it’s impossible to forecast price impacts 10 years ahead, Dowell Myers, a professor at the University of Southern California, told real estate columnist Kenneth R. Harney. “We do not mean to be alarmists,” Myers says, while noting that he hopes the issue will prompt more consideration for public and private policies that may cushion the potential fallout. He points to financing programs, for example, that could help urge more millennials to buy their first homes.
Lawrence Yun, chief economist with the National Association of REALTORS®, is not predicting such doom and gloom as a result of a baby boomer sell-off. He cites population growth in the U.S. and emphasizes the rising importance of foreign-born buyers. There should be “no measurable declines” from baby boomers, he says.