They are saying that in the expensive coastal markets there are fewer empty-nesters, but they base that opinion on the percentages? The San Diego metro of 3.3 million x 13% = 429,000 empty-nesters sounds significant to me!
Some have suggested that empty nest households – those aged 55 and older living with no children with at least two extra bedrooms and in place for at least a decade – could eventually flood the housing market with their homes and help make homes more affordable. However, data indicates that this demographic is unlikely to make a meaningful impact over the coming years, especially in the most expensive markets.
Nationwide, there were roughly 20.9 million of these empty nest households in 2022, up modestly from 20.2 million in 2017.
All else equal, in order for empty nest households to make a meaningful contribution to lowering house prices, their numbers must exceed the number of families that currently need their own housing and those that will want or need homes in the future. In addition, because relative affordability varies so widely across the country, this potential supply of homes would need to be concentrated in markets with the worst housing shortages to make a dent. Unfortunately, this future supply coming from empty-nest households doesn’t line up with the areas of greatest need on the map.
The number of empty nest households does exceed the number of families in need of housing: by 2.6 times.
There were 20.9 million empty nest households in 2022 compared to 8.1 million families living with non-relatives that were likely in need of their own unit, and that surplus has grown over time. From 2017 to 2022, the number of families doubling up — living with non-relatives — grew by 500,821. During that same period, the number of empty nest households increased by 703,892.
The problem: Most empty nest households can be found in already relatively more affordable markets. These are areas where housing is already more available, the rate of doubling up with non-relatives is much lower, and they’re located far from where the crush of current young workers choose to live.
A flood of currently owner-occupied homes hitting the market as their current owners pass away or otherwise vacate their homes will NOT solve housing affordability challenges, especially in high demand housing markets.
A silver tsunamiis likely to have a larger impact in regions like Pittsburgh and Cleveland. Younger residents have tended to leave these areas to pursue better job opportunities elsewhere, leaving older generations to make up a larger share of those who remain. Young workers choose to live near productive job centers and on the coasts, areas that have much lower populations of older retired individuals holding back housing supply in the first place.
Among the 50 largest metropolitan areas, Pittsburgh, New Orleans, Detroit, Buffalo, Cleveland were the markets with the largest gap between the potential housing supply from empty nest households and potential demand from younger residents. But these are already relatively more affordable markets with fewer home buying age workers to begin with.
In expensive coastal markets with strong job centers where home buying age workers choose to live — like Austin, Seattle and Denver — there are fewer empty nest households to begin with.
As a result, the impact of a future increase in supply coming from the existing housing stock owned by older individuals would likely have a smaller impact on affordability in expensive high demand coastal markets. Without the promise of remote work or investments that improve work prospects and raise the desirability of Midwest markets, it is unlikely that we will see a big shift in migration patterns towards markets full of empty nesters.
Rather, the fix for affordability challenges remains a strong supply expansion coming from newly built homes. Zillow research shows that housing shortages were the most severe in markets with more land use restrictions. In addition to promoting denser construction, removing barriers to homeownership that aren’t related to income — credit assistance programs, down payment assistance or help with closing costs, for example — would likely improve access to homeownership.
Meredith is at it again……predicting the silver tsunami. She doesn’t present any evidence or data to prove it’s happening or when or where it will happen. She’s just getting paid for being an ivory-tower doomer:
In fact, the article pretty much rebuffs the whole idea (hat tip to ‘just some guy’ for sending this in):
Approximately 79% of homes in the US are owned by people aged 65 and older. Aging in place is fine, but many of the more-affluent seniors are opting for luxury accommodations and paying a hefty price – and there is no shortage of demand. The better units at La Costa Glen have a three-year wait list – plan ahead! From the WSJ:
In the heart of Silicon Valley, well-off baby boomers enjoy meals of porchetta and cheesy polenta, prepared with herbs plucked from the community garden. Thirty-foot-tall windows offer a view on a quiet creek winding along manicured grounds.
Spending later years at this community, Vi at Palo Alto, comes with a price tag that starts with an upfront payment that can range from $1.17 million for a one-bedroom apartment and up to $7.3 million for a three-bedroom unit. Ongoing monthly fees up to $13,800 cover services such as housekeeping and valet parking, and amenities. Residents can attend lectures by professors of nearby Stanford University or a performance by opera singers.
For wealthier Americans, greater options exist for how to spend their later years. A growing crop of high-end communities, called life plan communities, allow residents to start in an apartment and then move to more nursing-like care as they age. Occupancy rates are rising, with the rate in the independent living units above 80% today, according to NIC MAP Vision, a data source for senior housing research.
Resident contracts typically work like a membership and, depending on terms, lock in rates so that costs don’t escalate when higher levels of care are needed. Inclusive care contracts come with higher upfront fees, but allow customers to sidestep having to find, and pay for, different levels of care as they age.
Many baby boomers who watched parents or friends struggle to age in their homes—and scramble to find nursing or home healthcare—say they are determined to do things differently, for their own peace of mind and that of their children.
“It’s a gift to our kids,” says Virginia Pollard, who lives with her husband, David, at Vi at Palo Alto.
Finding the right life plan or continuing care retirement community is like looking at colleges, say residents. The ideal is a place that feels personally comfortable, whether in the city or country, and where they can be among others with similar accomplishments and interests.
Kendal Corp. has life care communities near Oberlin College in Ohio and Cornell University in Ithaca, N.Y. The Forest at Duke neighbors Duke University. Like colleges, they often have wait lists.
Ron Litvak, 66, a retired lawyer in Denver, says he and his wife are on two wait lists, one for a premier life planning community in Denver and another for La Costa Glenin Carlsbad, Calif., and plans to get units in each.
As the boomer estate sales become the dominant source of homes for sale, their buyers can expect to do some work. In most cases, there will be a lot to do!
The U.S. Census Bureau released a report showing that about 4 million U.S. households with an adult age 65 or older had difficulty living in or using some features of their home.
About 50 million, or 40 percent, of U.S. homes had what were considered to be the most basic, aging-ready features: a step-free entryway into the home and a bedroom and full bathroom on the first floor.
About 4 million or 11 percent of older households reported difficulty living in or using their home. The share increased to nearly 25 percent among households with a resident age 85 or older.
Older homeowners tended to be aware of their home’s accessibility shortcomings – they just don’t do anything about them. Most older households did not plan to renovate to make their home more aging accessible – only about 6 percent of homeowners with at least one person aged 65 or older had plans for home improvement projects to make their home more accessible for people with physical limitations. For the oldest households (one person over 85 years old), this proportion increased to 9.1 percent.
If you are going to make one last move, do it when you are younger/healthy and can handle it. We just spent the last two days helping my uncle go through his ‘stuff’, and it’s amazing how much accumulates over time!
We are going through this now in our family, and it’s probably happening to you or someone you know. It’s a reminder that if you’re a senior and have one move left, it’s so much better to move sooner, rather than later (trying to put a real estate spin on this touching video).
During the Yahoo Finance Invest Conference, Meredith Whitney, who accurately predicted the 2008 financial crisis and became known as “the Oracle of Wall Street,” said that housing prices will fall in 2024 due to a “silver tsunami” of baby boomers who are expected to downsize in the coming years.
More than 30 million units of housing are expected to be brought onto the market as 51% of people over 50, who own more than 70% of U.S. homes, downsize to smaller homes.
It’s been a challenging time for hopeful homebuyers amid soaring prices and mortgage rates, but a little bit of good news might be around the corner.
Highlighting estimates from AARP, Whitney said that over 51% of individuals aged 50 and above, who own more than 70% of U.S. homes, are projected to move into smaller residences. This downsizing trend could result in over 30 million units of housing being brought onto the market.
Every year another expert rages on about the silver tsunami, mostly based on antiquated beliefs that seniors will all downsize – but it’s different now, especially around San Diego.
If seniors are downsizing, they need to leave town to make it worth moving. Here’s how the local populations have changed in a recent 2-year period – it’s hardly been an exodus, and it also suggests that there are new incoming residents who are filling the gap:
Houses are getting bigger overall, but that doesn’t mean a larger house is right for you.
“Fit is super important, and people get complacent and they don’t think about if their home is still fitting them,” says Marni Jameson Carey, a home and lifestyle expert, author of “Downsizing the Family Home: What to Save, What to Let Go,” and president of Power to the Patients, a nonprofit organization.
Here are four signs your home may be bigger than you need or can handle.
There are rooms you haven’t spent time in for weeks.
You haven’t furnished the whole house.
The property taxes are too much for you.
Most of the stuff belongs to people who’ve moved away.
And here are four things you can do about it:
Reach out to a professional.
Stay in a short-term rental for a while.
Consider all your needs.
Don’t just downsize your home.
There Are Rooms You Haven’t Spent Time in for Weeks
A four-bedroom McMansion may have once been perfect for a house full of teenagers and hosting extended family for the holidays, but now all but your own bedroom is a guest room and you no longer host Thanksgiving for the family.
“You’re overheating spaces that don’t need to be heated at all because you’re not using them,” says Eric Stewart, CEO and associate broker of the Eric Stewart Group of Long & Foster Real Estate in the District of Columbia metro area. “I think it’s the slow realization that the house owns you more than you own the house.”
You Haven’t Furnished the Whole House
Whether you don’t need a room or can’t afford to put furniture in it yet, the fact that your furniture choices can’t match the house you bought may be a sign it’s not the right real estate fit.
“Plastic chairs on a patio on an $800,000 house, and you go, ‘What happened here?’” Carey says.
If you’ve lived in the house more than a few months and you’ve left entire rooms bare, ask if you’re ever going to take full advantage of the total square footage you own. If you see it as unlikely, consider “right-sizing” your property to fit with your lifestyle as well as your wallet.
The Property Taxes Are Too Much for You
You can deduct your state and local property taxes up to $10,000 from your itemized federal tax filing, but for many homeowners that still means they’ve got a few thousand dollars to pay without annual relief.
If the limit on property deductions isn’t enough and means you’re financially strapped, you should rethink the home you own. Consider whether the location outweighs your ability to pay other expenses, and look at alternative cities or neighborhoods that might be able to provide the life you desire without the excessive costs currently tied to it.
Most of the Stuff Belongs to People Who’ve Moved Away
A classic empty nester problem is having all your kids’ belongings spanning from birth to college – and even beyond – with no real use for any of it. Trying to get your adult children to decide between keeping their macaroni art from first grade at their own house and letting you toss it can be tough for both sides, but keep in mind that your home shouldn’t be used as a storage unit.
Carey says, when given a certain amount of space, most people will naturally fill it up with belongings. In the case of empty nesters, that space is often filled with memorabilia that ultimately does not provide enough sentimental value to anyone to be kept. Put your foot down and have your kids come by to clean up and take what they would like to keep.
Even if you’d like to stay in your home in the long run, it’s important to regain control of the property when others stop living there. The worst-case scenario is realizing you need a smaller house or need to move to where you can get more care but feel overwhelmed by the task of clearing out the house. “Don’t be there as a default – be there by choice,” Carey says.
There is no cool-down period now. Once a purchase contract is signed, the seller has to sell.
Katy Perry’s real estate history hasn’t exactly been smooth sailing. The singer has been wrapped up in several legal battles with elderly homeowners in California, and the conflicts have even inspired a proposed law named the Katy PERRY Act—which not exactly a positive claim to fame. Ahead, take a look at everything we know about the potential law.
The Katy PERRY Act, also referred to as the PERRY Act, “addresses the risks of elder financial abuse, especially as it relates to property and real estate sales and transfers,” according to a website created by its supporters. “The Act establishes a 72-hour cool-down period during which either party involved in a contract for conveyance of a personal residence, in which one party is over the age of 75, can rescind the agreement without penalty.” The name is an obvious reference to the singer, but PERRY also stands for Protecting Elder Realty for Retirement Years Act.
While the PERRY Act has not gone through any legislative processes—and is an effort supported by Perry’s opponents in her current real estate court battle—the proposed act has bipartisan support. Among the signing legislators are state representatives, assemblymen, and senators with the majority from New Mexico and Texas. Others are from Arkansas, California, Kansas, Missouri, Montana, Nevada, New York, North Dakota, Oklahoma, Rhode Island, and Wyoming.
Katy Perry has been involved in several legal battles that the website dedicated to the act points to as examples of “predatory acquisition, unfair dealing, or elder financial fraud.” Her most recent high-profile case involves 84-year-old Carl Westcott, who filed a lawsuit to block the sale of his Santa Barbara, California, home to Perry and her fiancé Orlando Bloom. According to court documents, Westcott is alleging that he “lacked the mental capacity to understand the nature and probable consequences of the contract.”
Westcott—who was diagnosed with Huntington’s disease in 2015—purchased the home in May 2020 for $11.25 million with the intention to reside there for the rest of his life. Not long after, he was presented with a proposed contract to sell his home to Perry and Bloom. The contract is dated July 14, 2020, and the offer was for $15 million.
Before signing the contract, Westcott underwent a six-hour back surgery on July 10. When he entered the contract, the lawsuit claimed he was suffering from pain and post-surgical delirium from the surgery, “dementia and/or diminished mental cognitive functions” from Huntington’s, and he was under the influence of pain-killing opiates that his physicians instructed him to take. (If the name Westcott is familiar to you, it may be for one of two reasons: Carl is the founder of 1-800-FLOWERS and his daughter, Kameron Westcott, was a star of the now-cancelled Real Housewives of Dallas.)
The author has been writing about housing for 3+ years, and has already identified the key topic. Even though the houses owned by boomers might be in superior locations, they are dated and in need of repairs and improvements. While she thinks fixers will become popular again, it will only be those that are appropriately discounted. During the frenzy, no discount was needed, now it’s around 10%, and soon it will be 20% or more as the group of two-story fixers grows faster. The market is dividing into four quadrants; one-story, two-story, creampuffs, and fixers.
The number of people 80 years of age or older is expected to more than double between 2022 and 2040, increasing from 13 million to 28 million. As the baby boomer generation ages into their 80s, starting slowly in the late 2020s and picking up speed in the 2030s, they will likely begin downsizing and selling their homes, putting more housing supply on the market.
However, many of the homes being sold by baby boomers will need some work. Approximately 942,000 single-family homes owned by a head of household that is over the age of 60 are considered “inadequate” dwellings, according to the 2021 American Housing Survey (AHS). The AHS definition for an “inadequate” dwelling includes units with severe defects such as a lack of electricity or hot water, insufficient heating during the winter, or water leaks. That still leaves approximately 32 million single-family homes considered “adequate” in 2021. Of those, approximately 11 million were in the top 25 U.S. metropolitan areas, including 1.5 million units in New York, 852,000 in Los Angeles, and 490,000 in Washington, D.C.
Even so, many of the structures considered adequate would still likely need updating and remodeling to be brought up to date and be attractive to potential buyers. Given the highly sought-after locations of these housing units, there will likely be buyers willing to spend the money needed for updating and remodeling. Somewhat by default, the fixer-upper will be popular again.
The demographics for home buying will remain very favorable in the coming years. Today, the housing market suffers from a shortage of housing inventory—a deficit of approximately 2 million housing units in early 2023—due to a combination of decade-long underbuilding and a demographic wave of demand from millennial home buyers. However, the generation behind the millennials, Generation Z, is smaller in size and will likely require fewer housing units. Over the next decade, as baby boomers age out of homeownership, the housing shortage may narrow and eventually disappear. Demographic trends dictate long-run demand and supply in the housing market and, though they may move slowly, they are hard to outrun.
