Silver

‘Silver Tsunami’s’ Impact on the 2024 Housing Market

kali9 / iStock.com

kali9 / iStock.com

It’s no secret that buying a house is expensive these days. The typical sales price of a home in 2023’s third quarter was $513,400, whereas it was just $324,400 a decade ago, according to the St. Louis Fed. Meanwhile, the average interest rate on a 30-year fixed mortgage is currently around 6.61%.

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Considering high interest rates and housing prices, purchasing property feels like an unreachable goal for many people. But with many baby boomers reaching the traditional retirement age of 65 and looking to downsize, younger generations are starting to wonder what the housing market might look like in coming years.

GOBankingRates interviewed two real estate agents, Erin Hybart and Omer Reiner, about the “Silver Tsunami” and how the housing market might shift in 2024 and beyond. Here’s what they said.

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Understanding the ‘Silver Tsunami’ and Why It’s Happening

“The Silver Tsunami refers to a larger portion of the U.S. population hitting the traditional retirement age of 65 and moving from their larger, family home to something smaller when the kids are grown and flown,” said Omer Reiner, a licensed Realtor and president of FL Cash Home Buyers, LLC.

In particular, the Silver Tsunami refers to baby boomers — those born between 1946 and 1964. This generation currently makes up roughly 20% of the U.S. population. Up until recent years, boomers were the singular largest generation of adults in the country. In fact, this generation had 78.8 million people at its peak.

Many of the older boomers retired long ago, while those still working are fast-approaching their retirement years. And for many retirees, downsizing to a smaller home is the next logical step upon leaving the workforce.

But what does this mean for the next generation?

Well, a significant portion of boomers own their own home. According to Visual Capitalist, boomers have a cumulative $18.3 trillion in real estate alone. In comparison, Gen Xers have $13.6 trillion, while millennials only have $5 trillion in this same asset category.

With the Silver Tsunami, the housing market could experience a dramatic shift. As boomers sell their homes for something smaller — and potentially more manageable — it could free up some housing inventory. But it could also lead to higher housing demands or a demand for different types of homes. It might even lead to major price swings. This shift could last well into 2024 and beyond.

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The ‘Silver Tsunami’ Could Free Up Housing Inventory

According to Reiner, the Silver Tsunami’s effects will vary across the country. In some markets, there could be a rise in available properties.

“Here in Florida, there will be at least three retirement-friendly cities — Orlando, Miami and Tampa — that expect older residents to free up more than 14% of available housing,” said Reiner. “Pair that with working-age residents seeing signs of wage increases and the widely expected mortgage rate cuts expected in 2024, these buyers look to have a lot of options!”

In other markets, there might not be as noticeable a shift. Or if there is one, it might take longer to make itself known.

“If you are in areas that won’t see such a shift, places where your older population is staying put, don’t worry too much,” said Reiner. “The overall nationwide market changes we expect just might tempt some in that group to head south, putting more homes up for sale where you live. It’s just too early to know.”

Move-in Ready Homes Could Be in High Demand

As boomers downsize to smaller, more manageable homes, the demand for move-in ready or multi-generational homes could increase.

“Next year, we will see an increased demand for move-in-ready, age-friendly homes as retirees seek properties with features like accessible designs and low-maintenance yards,” said real estate agent Erin Hybart with the ReErin blog.

“There’s likely to be a shift towards smaller, more manageable homes as older homeowners downsize,” Hybart continued. “We may see a rise in multi-generational living spaces to accommodate families with aging parents.”

This increased competition could lead to higher property prices for these types of properties.

The ‘Silver Tsunami’ Could Be an Investment Opportunity

As demand for certain types of housing increases, the coming years could be a great time for investors looking to build their portfolio through real estate. This is especially likely for those who focus on multi-generational houses or smaller homes geared toward the older population.

“Assessing a property to determine if it could easily be converted into a move-in ready, age-friendly, manageable home with a low-maintenance yard for resale in the future could be a long-term strategy to play,” said Hybart.

Larger Homes May Become Available

With boomers moving out of their larger family homes, these properties will go back on the market. For younger generations looking to start or raise a family, or even for those who simply want more space, this could be a good thing.

“If the retirees are looking for smaller, more manageable homes, they could give up larger homes with larger yards,” said Hybart. “There will likely be an increase in larger homes coming to market.”

The downside is that other buyers are likely to be looking for these types of homes, as well. This could lead to increased competition or housing prices for homes with a larger lot, more square footage or a sizable yard.

Bottom Line

While it’s too soon to know the exact impacts of the Silver Tsunami on the housing market, it’s safe to say that there are going to be some major shifts in the coming years.

For boomers who want to sell their property and downsize, be prepared for increased demand for smaller homes with age-friendly features. For those who are just starting out, or who want to purchase property in the next couple of years, be on the lookout for any major shifts in available housing, different types of properties and prices in your area.

But don’t rush — this shift isn’t likely to happen all at once or affect all markets in the same way. So, take some time to prepare before you buy.

“For anyone planning to buy in 2024, make sure you have your finances in order,” suggested Reiner. “Keep your credit score up, reduce debt where you can and know your budget for a home. Prepping for what you can afford and comparing it to your wish list now can save you time and potential disappointment later.”

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This article originally appeared on GOBankingRates.com: I’m a Real Estate Agent: ‘Silver Tsunami’s’ Impact on the 2024 Housing Market


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