Seniors, Young Adults Will Influence U.S. Housing Markets
Independence, OH (June 01, 2012) — Aging baby boomers and their echo boomer children will significantly impact trends in the nation’s housing market over the next 20 years, according to Joanne Zettl, Chair-Elect of the Cleveland Area Board of REALTORS® (CABOR). In a new report released by the Bipartisan Policy Center, “Demographic Challenges and Opportunities for U.S. Housing Markets,” researchers at the National Association of REALTORS® (NAR), The Urban Institute, and the University of Southern California analyze key demographic trends and their likely influence on housing and homeownership in the U.S.
Over the next two decades, the aging baby boomer generation will swell the nation’s senior population by 30 million. That demographic shift will likely help increase the supply of housing, since people over age 65 typically release much more housing than they absorb.
“The Midwest is most likely to see a large number of older homeowners selling their homes to younger homeowners as the baby boomers age,” said NAR Chief Economist Lawrence Yun. “This increased supply could mean additional buying opportunities for echo boomers. That generation will absorb 75-80 percent of the available inventory of owner-occupied housing by 2020.”
The echo boom generation includes nearly 65 million people born between 1981 and 1995. NAR’s analysis illustrates the potential impact of economic and housing policy on this generation’s demand for housing as they come of age.
“Housing, jobs and the economy are inextricably connected,” said Yun. “A strong recovery with favorable housing market conditions would encourage substantial growth in echo boomer households, which would help absorb the current vacant inventory and stabilize conditions for residential construction. Under a reasonable ‘middle’ recovery scenario, approximately 12 million new households will be formed over the next decade, requiring construction of up to 15 million new housing units.”
Zettl noted that current market trends favor would-be homeowners of all ages. “As the supply of rental housing continues to fall, rents are increasing. At the same time, affordability for homeowners is at a record high. For buyers who qualify and are ready to assume the responsibilities of owning a home, opportunity is knocking.”