Real estate website Zillow recently conducted an analysis of housing inventory that’s expected to hit the market over the next couple of decades. Currently, housing inventory is considered to be in a crisis as buyers are flooding the market and developers struggle to build inventory to keep up with demand. Since baby boomers make up about one-third of the homes that are owned in the U.S., they are expected to provide a big supply of inventory as they transition out of homeownership.
According to Zillow, about one-third of homes in the United States today are owned by those 60 and older. Analysts expect that by 2037, 27% of currently owner-occupied homes will become available across the U.S. However, some markets will be more “flooded” – and thus negatively affected – than others.
The analysis went deeper into the numbers to illustrate the impact boomers will have on real estate over the next several decades. Through 2027, the Zillow analysis anticipates that approximately 920,000 baby boomer homes will be released into the market every year. Compare that to the decade between 2007 and 2017 when 730,000 baby boomer homes are expected to hit the market and it’s easy to see the significant impact boomers will have on real estate in the decades to come.
A report about the analysis that appears in Senior Living shows that one-fifth to one-third of the current owner-occupied housing stock is predicted to be affected in every metropolitan area analyzed. In the Senior Living report, it’s said that popular retirement destinations such as Florida and Arizona will probably see the biggest effects. However, Rust Belt areas, where older adults make up a larger share of the population, also will be “heavily impacted,” Zillow predicted.
According to Zillow, cities like Austin will be “far less affected” due to a smaller share of older homeowners. Additionally, Austin is a popular city for homebuyers across generations, especially younger buyers. Younger homebuyers could play a huge role in ensuring that baby boomer housing stock is effectively absorbed in a market with the least negative impact to housing stability.
Housing inventory has been at such a low level in Austin for about a decade now. Since the local economy is expected to maintain strong growth for the foreseeable future, newcomers will continue to relocate to the Austin area to find work. Real estate is expected to continue stable growth in tandem with the job market. Continuing demand for Austin area housing will insulate the local real estate market from being negatively affected by a glut of inventory.
“Austin is one of the best markets to buy into for multiple reasons,” explains David Brodsky, broker/owner of David Brodsky Properties in Austin, TX. “Not only is our economy diverse, but so is our housing inventory and our real estate consumer group,” he said. “Homes in all price points are selling well. And since we have a large population of first-time homebuyers, it’s likely that they will need larger homes that come available as baby boomers transition out of homeownership.”
Results within metro areas will vary, Zillow noted.