WSJ: The Effects of Moving Baby Boomers on Home Prices

As many American baby boomers are poised to move out of their homes by the mid-to-late 2020’s, some observers are asking what kind of effect a mass migration of older Americans will have on the housing market and in some local economies. This is according to a story published in the Wall Street Journal (WSJ).

By looking more closely at Sun City, Ariz., dubbed “the original retirement community” when it opened its doors in the 1960s, a possibility begins to emerge considering the fact that many of the community’s residents are roughly the same age.

“The same demographics that propelled Sun City’s rise now pose an existential challenge to this suburb as baby boomers age,” writes WSJ’s Laura Kusisto. “More than a third of Sun City’s homes are expected to turn over by 2027 as seniors die, move in with their children or migrate to assisted living facilities, according to Zillow. Nearly two thirds of the homes will turn over by 2037.”

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This leads to natural questions ranging between topics like the housing market up through the stability of the local economy, she writes. With that many homes all poised to have ‘for sale’ signs stuck in the front yard right around the same period of time, it could lead to some demonstrable economic effects, she says.

“The U.S. is at the beginning of a tidal wave of homes hitting the market on the scale of the housing bubble in the mid-2000s,” Kusisto writes. “This time it won’t be driven by overbuilding, easy credit or irrational exuberance, but by an inevitable fact of life: the passing of the baby boomer generation.”

Complicating oncoming issues related to the vacancy of the homes is the fact that the generation following the baby boomers, Generation X, have very different attributes ranging from financial status down to simple preferences for homes they’re looking for.

“One problem is that the bulk of the supply won’t necessarily be in places where these new buyers want to live,” Kusisto writes. “Gen Xers and the younger millennials have shown thus far they would rather be in cities or suburbs in major metropolitan areas that offer strong Wi-Fi and plenty of shops and restaurants within walking distance—like the Frisco suburbs of Dallas or the Capitol Hill neighborhood of Seattle.”

For a community like Sun City, it would also be challenging to potentially adapt it in the future for an influx of younger residents, according to local housing consultant Jim Belfiore.

“The market would be soft for a number of years,” he told WSJ.

Read the story at the Wall Street Journal, subscription required.

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