Have you heard the term “Silver Tsunami” recently? If so, here’s what you need to know. This phrase refers to the idea that many baby boomers will be moving or downsizing at the same time. And there are concerns that a sudden influx of homes for sale will have a significant impact on housing construction. This is because there will be much more competition for tiny houses and the balance between supply and demand will be disrupted, ultimately affecting housing prices.
But here it is. There are several flaws in this logic. Let’s break them down and put your mind at ease.
Not all baby boomers plan to move.
First, many baby boomers have no intention of moving. According to an AARP survey, more than half of adults 65 and older want to stay at home and not move as they age (see chart below).
Circumstances can change, and while some people who don’t intend to move (red in the chart above) realize they need to, most want to when they’re older.
Residents can adapt their homes as their needs change over time. And when renovating their existing home doesn’t work, some choose to buy a second home and keep their original home as an investment to grow their loved one’s wealth for the next generation. Inman’s article explains:
“Many boomers have no desire to retire fully and take up less space . . . Many will modify their current home, and the wealthiest will opt to have multiple homes.”
Even people who move don’t move immediately.
Not all baby boomers want to sell their homes and move, but not all do it at the same time. Instead, it will slow down over the years. As Freddie Mac said:
“We forecast the ‘tsunami’ will be more like a tide, bringing a gradual exit of 9.2 million Boomers by 2035 . . .”
As Mark Fleming, Chief Economist at First American, says:
“Demographics are never a tsunami. The baby boomer generation is almost two decades of births. That means they’re going to take about two decades to work their way through.”