There has been a lot of buzz online about the “Silver Tsunami”. This refers to the wave of baby boomers who are expected to downsize their homes as they grow older. The thought of this wave seems concerning, but will it really happen? And if so, how will it impact the housing market? In this blog post, we will delve deeper into this concept and explain why it won’t drastically affect the housing market as much as we might think.
What Does Silver Tsunami Mean?
A recent article from HousingWire calls it:
“. . . a colloquialism referring to aging Americans changing their housing arrangements to accommodate aging . . .”
The concept is that if the boomers downsized in large numbers, it would cause an uptick in the supply of larger homes for sale, thereby causing an imbalance in supply and demand. It makes sense in theory, but experts say that a silver tsunami hasn’t happened so far and it probably won’t anytime soon.
Here’s one reason why: many baby boomers do not want to move out of their homes. Data from AARP shows that over half of surveyed adults aged 65 and above plan to age in place rather than move. Clearly, not all baby boomers want to sell or move. Even those who do will not do so all at once. Instead, it will happen gradually over time.
Another reason why the silver tsunami seems unlikely is that there is a shortage of affordable homes. It’s a challenge for younger generations to purchase homes in the current market. When the baby boomers start to sell their homes, it’s likely that the homes they sell will be high-end properties that may not cater to first-time homebuyers and the middle-class population.
Furthermore, the real estate industry is adapting to cater to the needs of baby boomers. There are plenty of options available such as age-restricted communities, active adult communities, etc. As more and more retirees opt to age in place, there is a growing demand for housing designed for the elderly. There are plenty of communities that offer convenient locations, cost-effectiveness, and easy access to health care services.
Finally, this silver tsunami is not unique to the US. It’s a global phenomenon. Japan, for example, already faces low birth rates and an aging population. They have already dealt with a silver tsunami, and the market has adjusted to it without a significant impact. The same can be said for the US market.
The concept of a silver tsunami can be concerning, but it’s unlikely to cause major upheavals in the housing market. While a significant number of baby boomers may downsize, many don’t want to move at all. The industry is already adapting to cater to the needs of a growing elderly population and the market is also adjusting to the global phenomenon of aging populations. As always, the real estate market will have its own complexities and challenges, but the silver tsunami is probably not one of them.
