The housing shortage could end and oversupply may become an issue when a large percentage of baby boomers finally reach the point where they leave their homes, a recent report suggests.
“More than half of all existing homes are owned by baby boomers and the silent generation, who will eventually age out of homeownership. When that occurs, the problem may not be a lack of supply, but the exact opposite,” Mark Fleming, chief economist at First American, said in the report published Friday.
However, mortgage lenders and servicers are unlikely to be doing business in a market with excess supply before 2030 at the earliest.
That’s when all baby boomers will be past retirement age, and the number of older adults in the United States will exceed children for the first time ever, according to recent Census Bureau projections.
But even then, baby boomers’ propensity to age in place could continue to reduce the supply of available inventory.
Homeowner tenure, which rose dramatically during the Great Recession, is extending more slowly than it was. But it is still increasing, according to Fleming’s report, “Blame the Homebodies: Why Are Homeowners Staying in Their Homes So Long?”
A few years before the housing bubble burst in 2007, the median length of time people tended to stay in their homes before moving was four years or so, according to First American. Median home tenure between 2008 and 2016 extended out to seven years, and it continued to inch up after 2016. As of December 2018, is was an estimated 7.4 years.