Will A Silver Tsunami hit Real Estate?

Zillow reports that over the next 20 years, more than a quarter (27.4 percent) of the nation’s currently owner-occupied homes are likely to hit the market as their current owners pass away or otherwise vacate their homes.

• Housing released by the Silver Tsunami will provide a substantial and sustained boost to housing supply, comparable in magnitude to the fluctuations that new home construction experienced in the 2000s boom-bust cycle.
• It seems likely that, in the coming two decades, the construction industry will need to place a greater focus on updating existing properties, in addition to simply building new homes.

The massive Baby Boomer generation has already begun aging into retirement, and will begin passing away in large numbers in coming decades – releasing a flood of currently owner-occupied homes that could hit the market. That could help end the last few years’ inventory drought, as well as a more fundamental shortage of homes in certain places.

This Silver Tsunami of homes coming to market could be a good substitute for new home construction, which has been in short supply for the past decade in large part because of difficult-to-overcome challenges faced by builders.

Currently, 33.9 percent of owner-occupied U.S. homes are owned by residents aged 60 or older, and 55.2 percent by residents aged 50 or older. As these households age and begin vacating housing, that could represent upwards of 20 million homes hitting the market through the mid-2030s.

But while virtually all areas will feel the effects to some degree, this wave won’t hit all at once and won’t strike all markets equally. Certain markets will be more impacted than others, as will certain kinds of areas within a given market.