Who Will Buy the Baby Boomers' Homes?
A recent report, "Who Will Buy the Baby Boomers' Homes When They Leave Them? Population Aging, Mortality, and the Future Housing Market" by Gary V. Engelhardt and Syracuse University, examines the impact of population ageing and mortality on the future housing market in the United States. The baby boom generation, which was born between 1946 and 1964, is now entering retirement. This is expected to significantly impact the housing market as baby boomers begin to sell their homes and downsize.
The report finds that the number of homes for sale is expected to increase significantly in the coming years as baby boomers sell their homes. This could lead to a decline in home prices, as more homes will be for sale on the market than buyers with with the financial means to buy them. However, the report also finds that the demand for housing will continue to increase as the population continues to grow. Immigration is a key pillar supporting population growth. This means there will still be a market for baby boomers' homes, even if prices decline.
In 2022, baby boomers made up 39% of all home buyers in America. The report finds that the mortality rate among baby boomers is expected to increase in the coming years. This means that there will be fewer baby boomers alive to buy homes, and their participation in the market will decline over time. This could lead to a decline in demand for housing, which could further depress home prices.
The report concludes that the future of the housing market is uncertain. The impact of population ageing and mortality on the housing market will depend on several factors, including the pace of population growth, homeownership rate, mortgage interest rates, and the availability of mortgage credit.
The demographics of Canada are similar to those of the United States, so the report’s findings are likely to apply to Canada as well. The baby boom generation in Canada is also entering retirement, and this is expected to have a significant impact on the housing market. The number of homes for sale is expected to increase, and home prices could decline. However, the demand for housing is also expected to increase, so there will still be a string market for baby boomers' homes.
Here are some additional thoughts on the report:
The report highlights the importance of population ageing and mortality for the housing market. These factors are often overlooked, but they can have a significant impact on the supply and demand for housing.
While mortality rate is a factor, we need to consider households. Emotionally, widows might want to continue living in the family home after their spouse passes. However, financial advisors often recommend widows sell their homes. We do not know if baby boomers are more likely to stay or sell.
There are arguments that the heirs might keep the home. According to the 2021 Census of Population, the average number of children in Canadian baby boomer households that had families was 2.6, and most heirs will already own a home and have roots in their neighbourhood before they inherit, so most baby boomer homes will likely be sold.
Overall, the report adds another uncertainty variable to the future of the housing market. The impact of population ageing, mortality, and wealth transition will depend on a number of factors, and it is difficult to predict how these factors will play out.
