Will baby boomers turn into party poopers when they unload their homes in large numbers starting in the next decade? Could they create an indigestible oversupply in the market that lowers home prices and frustrates sales?
That’s a sobering scenario outlined by two new, provocative studies. One, from Fannie Mae’s Economic and Strategic Research group, warns that the “beginning of a mass exodus looms on the horizon,” where “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.” The net result: gluts in some local markets with potentially negative impacts.
A second study, from the Stephen S. Fuller Institute at George Mason University, focuses on the Washington, D.C., market and sees a similar problem ahead. “The significant number of older owners in relatively large homes may portend a ‘baby boomer sell-off’ ” in the D.C. region and elsewhere in the U.S., it reports. Some longtime owners “may have difficulty attaining the price gains they witnessed in their neighborhoods during recent years,” according to author Jeannette Chapman, the Fuller Institute’s deputy director.
Both studies cite demographic and housing data to make their cases. Boomers — the giant generation of Americans born between 1946 and 1964 — own 32 million homes, two of every five in the country. The generations preceding them occupy another 14 million homes. Collectively their properties are valued around $13.5 trillion, according to the Fannie Mae study, co-authored by Patrick Simmons of the strategic research group and Dowell Myers, a professor at the University of Southern California.
