Low supply and affordability are major headwinds facing today's homebuyers, as is the current age disparity among homeowners, according to new analysis.
Since 2006, homeowners households have grown by 2.8 million, and 2 million of those new households were formed in 2018, according to the latest data. By age, homeowners aged 55+ grew by 9.6 million, and those under 45 years decreased by 4.3 million--the age divergence in part due to the housing crisis when older homeowners mostly kept their homes, versus the younger buyers who either lost, or could not afford to buy a home. Currently, homeowners aged 55+ own 53 percent of all owner-occupied houses in the U.S.
Bloomberg columnist Conor Sen writes, "Those homes are all going to hit the market eventually, as [Boomer] owners downsize or die. This won’t be apparent for a while, but then there will be a 15- to 20-year period when it’s a major factor in the U.S. housing market.
The news is better or worse depending upon where you live. Populations are older in rural communities and in the Northeast and Midwest, which should mean more supply for prospective buyers in those geographies as inventory from older owners finds its way onto the market. The situation is likely to be worse in faster-growing and younger metros in the South and West. A microcosm of this could be the sluggish housing market in Greenwich, Connecticut, while the housing market in San Francisco booms.
Finding ways to build more housing will help, but ultimately some housing imbalances will resolve only when older owners’ homes go on the market.