As if the news on the US housing front were not bad enough already, a new study finds there may soon be more sellers than buyers for a very long time.
Research by Professor Dowell Myers and Sung Ho Ryu, a graduate student, at the University of Southern California analyzes house buying and selling, state by state, as it relates to baby boomer retirement.
The research finds that when boomers are aged 65 to 75, there will be three sellers for each buyer.
“Our analysis depicts a coming generational transition in the housing market that will upset the historic balance of buyers and sellers,” the authors find. “Residents in most states are net buyers of homes well into their 50s. The resulting upward pressure on demand by the large baby boom generation will soon peak, and after age 70 they will be net sellers in all except three states.”
Boomers were an incoming tide for four decades. Now the tide’s turned, and it’s going to make it much harder for housing markets to rise....MORE
Here's the paper:
Aging Baby Boomers and the Generational Housing Bubble: Foresight and Mitigation of an Epic Transition
Authors: Dowell Myers a; SungHo Ryu bc (Show Biographies)| Affiliations: | a School of Policy, Planning, and Development at the University of Southern California, |
| b Southern California Association of Governments, | |
| c School of Policy, Planning, and Development, |
Publication Frequency: 4 issues per year
Published in:
Journal of the American Planning AssociationFirst Published on: 31 December 2007
Subjects: City & Town Planning; Planning; Planning - Geography; Planning - Human Geography; Environmental Geography: Planning, Housing & Land Economy; Geography: Planning, Housing & Land Economy; Urban Studies;
Formats available: PDF (English)
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Previously published as: Planners' Journal until 1943 FREE ACCESS Previously published as: Journal of the American Institute of Planners until 1978
Abstract
Problem: The 78 million baby boomers have driven up housing demand and prices for three decades since beginning to buy homes in 1970 and continuing up the housing ladder. What will happen when boomers begin to sell off their high-priced homes to relatively smaller and less-advantaged generations?
Purpose: This article presents a long-run projection of annual home buying and selling by age groups in the 50 states and considers implications for communities of the anticipated downturn in demand.
Methods: We propose a method for estimating average annual age-specific buying and selling rates, weighting these by population projections to identify states whose growing proportions of seniors may cause an excess of home selling sooner than others. We also analyze the likely supplier responses to diminished demand, and recommend strategies for local planners.
Results and conclusions: Sellers of existing homes provide 85% of the annual supply of homes sold, and home sales are driven by the aging of the population since seniors are net home sellers. The ratio of seniors to working-age residents will increase by 67% over the next two decades; thus we anticipate the end of a generational housing bubble. We also find that younger generations face an affordability barrier created by the recent housing price boom. With proper foresight, planners could mitigate what otherwise could be significant consequences of these projections.
Purpose: This article presents a long-run projection of annual home buying and selling by age groups in the 50 states and considers implications for communities of the anticipated downturn in demand.
Methods: We propose a method for estimating average annual age-specific buying and selling rates, weighting these by population projections to identify states whose growing proportions of seniors may cause an excess of home selling sooner than others. We also analyze the likely supplier responses to diminished demand, and recommend strategies for local planners.
Results and conclusions: Sellers of existing homes provide 85% of the annual supply of homes sold, and home sales are driven by the aging of the population since seniors are net home sellers. The ratio of seniors to working-age residents will increase by 67% over the next two decades; thus we anticipate the end of a generational housing bubble. We also find that younger generations face an affordability barrier created by the recent housing price boom. With proper foresight, planners could mitigate what otherwise could be significant consequences of these projections.
