Freddie Mac is planning for nine million baby boomers to let their homes go — gradually.
Freddie Mac’s recent analysis predicts just 300,000 boomer-owned homes will be released to the market this year. Larger numbers will follow, though, increasing year by year. Freddie Mac’s report shows the silver tide has begun to roll. Expect the baby boomers to convey deeds to more than 9 million homes between now and 2035, says Freddie.
The Generations, on a Timeline
Over the year 2027, Freddie Mac expects 600,000 home deeds to be conveyed by boomers. See the slope? The number of deed conveyances will keep rising, on that upward slope, by a few hundred thousand more each year. Once the bulk of boomers are in their late 70s, they will hold far fewer deeds, Freddie Mac projects. Based on past patterns, we know that as young adults get older, more become deed holders. At age 75, this starts to reverse, with fewer and fewer holding deeds every year.
And there will be a total of 1.2 million deeds transferred by the baby boomer generation during the year 2035, when the older boomers approach their 90th birthdays. Between now and then, through the next full decade, Freddie Mac sees new generations picking up deeds as fast as boomers put them down.
Once into the 2030s, the market will be over its demand crunch. Supply will have increased. And as Freddie also points out, younger generations are getting smaller in numbers, so the housing shortage seems bound to taper off.
Readers might rightly point out that not all boomers will sell their homes into the real estate market. And in fact, 62% of the older adults told Freddie Mac’s survey that they’ll bequeath their homes, rather than put them on the market. Of course, quite a few such homes will return to the housing market — sold by the heirs.
Tsunami of Deed Transfers? Not Exactly, Says Freddie
Some time ago, Meredith Whitney, a Wall Street analyst who accurately predicted the 2008 housing market crash, used the phrase “silver tsunami.” The concept goes like this. Beginning in 2024, tens of millions of homes would start to return to the market, transferred by boomers to younger generations. The “tsunami” would be a storm of 69 million baby boomer deeds. That’s huge — it means about four out of every ten deeds are held by baby boomers. As NeighborWorks America president Marietta Rodriguez has asked, “How can this generational shift not have drastic implications for housing?”
But for those who are anxious to get on the ladder now, the supply crunch is still an obstacle. A few key factors hold boomers in a resilient position among the ranks of homeowners:
- First, people who already own homes are holding onto their deeds for longer. (Interest rates going down could speed up their decisions to return their homes to the market and downsize.)
- Meanwhile, home prices keep… on… rising. This makes financial moves more difficult for owners and hopeful buyers alike.
- Some boomers will age out of the market, yet leave their homes empty for extended periods. About 9% of U.S. homes have been left vacant, some of which are owned by seniors.
- Some boomers might move to retirement settings, but those who downsize will seek compact homes much like younger buyers do. This keeps the market for affordable homes heated and competitive.
- And the average baby boomer is actually just 67 years old. (In 2024, the youngest boomers turn 60.)
So, for the time being, we’re not seeing enough homes for people who need them. Whether you expect a tide or tsunami, there’s no quick fix for the housing crisis that currently grips the country. Freddie’s analysts say it’ll be a decade-plus before boomers fully embrace the downsizing mode.
Selling? Building? Prices? Freddie Mac’s Key Predictions
In its latest monthly outlook piece, Freddie Mac also offers a few interesting comments and predictions about the U.S. housing and mortgage market:
- Last year (2023), 4.8 million households sold their homes. Existing (not new construction) homes made up the bulk: 4.1 million sales. That was barely a trickle into the market. Deeds haven’t been clutched so hard at any time in the past 30 years!
- Builders are working on a large number of homes at this time. They’re especially focused on producing multi-unit properties.
- Because demand is still outpacing supply, Freddie Mac says price tags will keep swelling, regardless of high-interest mortgages: “We forecast home prices to increase 2.6% in 2024 and 2.1% in 2025.”
On the bright side, there’s certainly no housing crash in Freddie Mac’s picture of the foreseeable future.
Beat the Crowd? Takeaways for Market Watchers
There are a lot of deed holders aged 60+. What they do with their deeds in the coming years will naturally change supply-and-demand dynamics. And what will they do? Steadily relay nine million deeds to their juniors.
And so, for all generations, big deed decisions are coming. Perhaps, as The Wall Street Journal puts it: “The trick is to beat the crowd.”
Those could be key words for millennials and younger buyers. After all, the generations new to homeownership want compact, affordably priced homes. Boomers who downsize want some of those too. Clearly, competition in the market will take the better part of a decade to work itself out. Given all of these factors, those who can get active in the market now may be grateful later.
Note: Deeds.com is not a financial adviser and this article is not intended as financial advice. Each person’s situation is different; so, for case-specific questions, consult a professional.
Supporting References
Sam Khater et al., Freddie Mac® Economic & Housing Research group via FreddieMac.com: U.S. Economic, Housing and Mortgage Market Outlook / Spotlight – Aging Boomers and the Impact on the Housing Market Over the Next Decade (Feb. 26, 2024; citing data from the Urban Institute, the Federal Reserve, the American Community Survey, and other sources).
Sam Khater et al., Freddie Mac® Economic & Housing Research group via FreddieMac.com: U.S. Economic, Housing and Mortgage Market Outlook / U.S. Economy Remains Robust (Mar. 20, 2024).
Sydney Lake and Alena Botros for Fortune.com (as republished by Yahoo Finance): Nine Million Homes Will Come on the Market in the Next Decade as Baby Boomers Age – But the “Silver Tsunami” Will Be More of a “Tide,” Freddie Mac Says (Feb. 29, 2024; internal citations omitted).
Lance Lambert in Fast Company & Inc (Mansueto Ventures, LLC) via FastCompany.com: A Big Shift Awaits the Housing Market: Nine Million Boomers to Sell Their Homes by 2035 (Mar. 6, 2024; citing Nik Shah, CEO of Home.LLC).
Justin Lahart for The Wall Street Journal (Dow Jones & Company, Inc.) via WSJ.com: Congrats, Your House Made You Rich. Now Sell It (Nov. 16, 2023).
NeighborWorks America via PRNewswire®: Survey – Nearly 3/4 of Baby Boomers Use No Homebuying Resources (Jan. 30, 2024).
Kristina Zagame for TodaysHomeowner.com: 16 Million U.S. Homes Are Sitting Vacant, So Why Are Homes Still So Expensive? (updated Oct. 10, 2023).
And as linked.
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