Baby Boomers to Trigger the Next Housing Crash?

The next housing market crash might happen in less than a decade, according to an article from The Atlantic Cities. An aging baby boomer population could serve as a daunting omen just as the market has been recovering.  

As boomers sell their homes for more affordable residences, an increase by the millions of housing supply will create two classes of seniors in America, suggests Arthur Nelson, director of the Metropolitan Research Center at the University of Utah.

By 2020, Nelson projects there will be around 35 million over-65 households in the U.S. By then, he calculates that those seniors who wish to become renters will be trying to sell about 200,000 more owner-occupied homes than there will be new households looking to buy them. 

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By 2030, those units could rise to a half a million housing units a year, Nelson speculates. 

“Ok, if there’s 1.5 to 2 million homes coming on the market every year at the end of this decade from senior households selling off,” Nelson said in The Atlantic Cities article, “who’s behind them to buy? My guess is not enough.”

Demographics look to complicate things even further, the article suggest, as the American education system roadblocks quickly-growing minority populations from earning the income needed to buy these homes.

“Between changing preferences and declining median household income because of poor education – because we’re not willing to spend money on education,” Nelson says, “that means we can predict the next housing crash, and that’ll be in about 2020.”

Aging in place will not be feasible among 90-year-olds, Nelson suggests, as these people realize that they cannot perform household duties like mowing the lawn or pay for repairs. 

His suspicion is that “hundreds of thousands, maybe millions of those households in the 2020s to 2030s and beyond” will simply give up the house and walk away. 

Read The Atlantic Cities article.

Written by Jason Oliva

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  • It is not clear that the “pent up” inventory of homes has yet to come to market.

    Many took their homes off the market in the first year or so after the mortgage bubble burst. A high percentage of those homowners did not want to sell their homes in a down market and vowed not to put them up for sale again until home prices return to pre-burst levels. It is the homes of these prospective sellers that are generally referred to as the pent up inventory.

    So when will the pent up inventory show up in the for sale inventory? Some believe that the patience of many of these homeowners is at an end and they could put up their homes as early as this summer or next. Some predict that the situation is not yet up to the level many of these homeowners find acceptable and thus the thud from having these homes suddenly come on the market will wait for at least two more summers.

    In 2020 the oldest Baby Boomers will be 74. To believe that many of them will not be giving up their homes due to problems with keeping them etc. seems unrealistic. While 2020 is a little early to find realistic, three or four years later is not.

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