More on Boomer Housing

by Jim the Realtor | Oct 11, 2023 | 1-story, Boomer Liquidations, Boomers, Jim's Take on the Market

The author has been writing about housing for 3+ years, and has already identified the key topic. Even though the houses owned by boomers might be in superior locations, they are dated and in need of repairs and improvements. While she thinks fixers will become popular again, it will only be those that are appropriately discounted. During the frenzy, no discount was needed, now it’s around 10%, and soon it will be 20% or more as the group of two-story fixers grows faster. The market is dividing into four quadrants; one-story, two-story, creampuffs, and fixers.

The number of people 80 years of age or older is expected to more than double between 2022 and 2040, increasing from 13 million to 28 million. As the baby boomer generation ages into their 80s, starting slowly in the late 2020s and picking up speed in the 2030s, they will likely begin downsizing and selling their homes, putting more housing supply on the market.

However, many of the homes being sold by baby boomers will need some work. Approximately 942,000 single-family homes owned by a head of household that is over the age of 60 are considered “inadequate” dwellings, according to the 2021 American Housing Survey (AHS). The AHS definition for an “inadequate” dwelling includes units with severe defects such as a lack of electricity or hot water, insufficient heating during the winter, or water leaks. That still leaves approximately 32 million single-family homes considered “adequate” in 2021. Of those, approximately 11 million were in the top 25 U.S. metropolitan areas, including 1.5 million units in New York, 852,000 in Los Angeles, and 490,000 in Washington, D.C.

Even so, many of the structures considered adequate would still likely need updating and remodeling to be brought up to date and be attractive to potential buyers. Given the highly sought-after locations of these housing units, there will likely be buyers willing to spend the money needed for updating and remodeling. Somewhat by default, the fixer-upper will be popular again.

The demographics for home buying will remain very favorable in the coming years. Today, the housing market suffers from a shortage of housing inventory—a deficit of approximately 2 million housing units in early 2023—due to a combination of decade-long underbuilding and a demographic wave of demand from millennial home buyers. However, the generation behind the millennials, Generation Z, is smaller in size and will likely require fewer housing units. Over the next decade, as baby boomers age out of homeownership, the housing shortage may narrow and eventually disappear. Demographic trends dictate long-run demand and supply in the housing market and, though they may move slowly, they are hard to outrun.

https://blog.firstam.com/economics/when-boomers-and-millennials-collide-tectonic-shifts-in-demographics-are-coming