Is there a ‘silver tsunami’ housing inventory? Not where it’s necessary
There are two specific ways people can interpret the phrase “silver tsunami” in the context of the effects of aging on housing.
The first relates to demographic trends in the US, with older adults on track to overtake children as the largest age group over the next decade. The second relates to the housing inventory. The theory is that the homes of older people – either through death or their choice to downsize and move – will be put up for sale and become available to younger buyers.
The first view is less of a theory and more of an inevitability based on demographic trends. The second view has seen copious amounts of cold water thrown on it in recent years as older homeowners say they don’t want to sell. Meanwhile, some analysts believe that hopes for a flood of senior stocks to address the country’s housing shortage seem more like a pipe dream.
But new data by Zillow seems to indicate that while there is some semblance of truth to the second theory, the places where inventory is coming back onto the market are not where it needs to be to adequately address the U.S. housing shortage.
“Even if we saw a ‘silver tsunami,’ a look at the map tells me that wouldn’t really be a solution to the housing affordability problem,” said Orphe Divounguy, a senior economist at Zillow. “These empty-nest households are concentrated in more affordable markets, where housing is already more accessible – not in the expensive coastal job centers where young workers are moving and where more housing is needed most.”
According to Zillow research, there is an oversupply of 12.8 million “empty nest” homes nationwide. But these are mainly located in relatively affordable areas where the supply of housing is not scarce, and not in the urban employment centers where supply is most needed.
“A silver tsunami will likely have a greater impact in regions like Pittsburgh and Cleveland,” Zillow explains. “Younger residents tend to leave these areas to pursue better employment opportunities elsewhere, leaving older generations to make up a larger share of those left behind.
“Young workers are choosing to live near productive job centers and on the coast, areas where far fewer older retirees live, which holds back housing supply in the first place.”
The largest metro areas that could be hit by a silver tsunami are estimated to be Pittsburgh, New Orleans, Detroit, Cleveland and Buffalo, New York. These cities have “the largest gap between the potential housing supply of empty nest households and the potential demand of younger residents. But these are already relatively more affordable markets, with fewer workers buying homes to begin with.”
More expensive and/or coastal markets are not as fortunate, including areas like Austin, Seattle and Denver.
This means that the impact on national affordability from a potential “silver tsunami” is likely to be minimal. But the problem could be exacerbated by more companies imposing office-based work requirements, or other potential prospects designed to improve the attractiveness of other markets to potential homebuyers.
“[T]The solution to the affordability problems remains a strong expansion of supply from new construction homes,” Zillow said. “Zillow research shows that housing shortages were most severe in markets with more land use restrictions. In addition to promoting denser development, removing barriers to homeownership that are not related to income – for example, credit assistance programs, down payment assistance, or assistance with closing costs – would likely improve access to homeownership.”
As for the population-based concept of the silver tsunami, it appears to be alive and thriving. Some popular retirement destinations — including South Carolina and Florida — are even warning city leaders and infrastructure managers that they need to do more to prepare for the larger numbers of older residents planning to move there.
