Getty Images; Alyssa Powell/BI
You can't talk about the housing shortage or runaway home prices without boomers on the brain.
Baby boomers dominate America's housing market. Members of the "Me" generation own nearly $19 trillion worth of US real estate — more than double the amount held by millennials and about $5 trillion more than Gen Xers. Their massive land grab has continued well into their twilight years as they've used their mountains of savings and accumulated equity to edge out younger buyers.
But as the generation ages, its vast real-estate portfolio poses a question: What happens when boomers die?
By 2040, the population of 80-plus-year-olds will have more than doubled from today, according to projections from the Census Bureau. In the years leading up to that, boomers will begin to leave their residences as they die, move into nursing homes, or shack up in granny flats. Some economists have predicted that a "silver tsunami" of aging Americans will leave millions of homes up for grabs, lowering prices and unlocking opportunities for younger generations used to fighting for table scraps. Others have likened the phenomenon to a glacial shift — slow, predictable, and unlikely to sway home prices as much as 20- and 30-somethings might hope.
Regardless of the degree to which boomers' exit shakes up the market, the changing of the guard will leave one generation in the driver's seat: Gen Z.
Most Gen Zers will be in their prime homebuying years at this crescendo — perfect timing to take advantage of the increase in supply. Since many boomers are downsizing later in life, their leftover inventory could include many of the kinds of starter homes that are perfect for younger households and scarce in today's new housing stock.
Millennials will benefit somewhat, but they'll be well past the typical age for first-time buyers. After all their economic misfortune, they'll still face a turbulent housing market and potentially tens of thousands of dollars' worth of necessary updates to boomers' aging houses.
No generation has shaped the modern housing market more than baby boomers. Now they're about to reshuffle the cards one last time — and Gen Zers might just end up with the winning hand.
Tsunami versus glacier
Despite the numerous efforts to forecast its moves, the real-estate industry is wildly unpredictable; good luck guessing where mortgage rates will be in 10 years or how many new homes will hit the market. Demographic patterns, on the other hand, follow a more certain path — it's much easier to estimate when generations will start to fade away. Historical data tells us we can expect boomers to begin aging out of their homes after they reach 80, Odeta Kushi, the deputy chief economist for the title company First American, told me. Given that boomers are currently between 60 and 78, Kushi said, we should see a rise in the number of boomers leaving their homes around 2030. Gary Engelhardt, a professor of economics at Syracuse University who has studied the fate of boomers' homes, told me he expects the bulk of the boomer generation to age out of the market between 2030 and 2040.
"In the next 15 years, this stuff's really going to start happening," Engelhardt told me.
Millions of homes hang in the balance. Boomers claimed 41.6% of the real-estate wealth in the country as of the third quarter last year, according to data from the Census and the Federal Reserve. As of 2022, a whopping 79% of baby boomers owned the homes they lived in, compared with 52% of millennials and more than 26% of adult Gen Zers, per a Redfin analysis of Census data. In 2019, Zillow estimated that more than a quarter of the nation's owner-occupied homes, or more than 20 million units, would hit the market over the following two decades as a result of boomers aging. The report, written by Issi Romem, called this wave of homes the "silver tsunami" and said it would "boost the supply of housing on a magnitude comparable to the fluctuations that new home construction experienced in the 2000s boom-bust cycle." The Wall Street forecaster Meredith Whitney, known for calling the 2008 housing crash, recently resurfaced the silver-tsunami theory, predicting that the influx of housing inventory from widespread aging would lower prices.
But Engelhardt and other economists told me the long-awaited boomer sell-off would likely take longer and wreak far less havoc than the tsunami metaphor would suggest. In his 2022 paper, "Who will buy the baby boomers' homes when they leave them?", Engelhardt argued that mass aging would send ripples through the housing market but fail to push down prices significantly. Because aging is predictable and takes time, Engelhardt told me, markets will adjust to any spike in available homes. If there are more homes for sale than the market can absorb, otherwise known as excess supply, many would-be sellers may start turning units into rentals, which would prevent prices from dropping too much.
In the next 15 years, this stuff's really going to start happening
"If you allow these conversions, where basically you could take a house that would typically be used by an older family and now it's available to a younger family as a rental," Engelhardt told me, "then that is kind of an escape valve, a pressure release."
In Engelhardt's model — which he likened to a glacier rather than a tsunami — the great boomer exit will contribute to an excess supply of about 250,000 homes a year until about 2032. After that point, demand for home purchases will once again outpace supply as millennials buy more homes and younger generations, like Gen Z and Gen Alpha, file in behind them. A quarter of a million homes annually may sound like a lot of houses, but it's "a drop in the bucket," Engelhardt said. For reference, the National Association of Realtors said total sales of existing homes in 2023 were on pace to reach 3.8 million as of November.
Boomers' departure may not lead to a housing-market free-for-all, but their homes will have to go to somebody. And in the power vacuum left behind, Gen Zers — not millennials — have the brightest future.
Gen Z on top
Millennials, born between 1981 and 1996, have had a pretty rough go in the housing market. They started their careers in the wake of the Great Recession, took on far more student debt than their predecessors did, and were left to contend with a housing crunch caused by a slowdown in homebuilding. They faced competition not just from their peers but from baby boomers, who've been far more active buyers later in life than previous generations were. Left to dream of better days ahead, millennials have hoped that boomers' eventual exit will unleash an onslaught of vacant homes and lower prices enough for them to hop on the ladder. But once again, the timing looks like it won't work out in their favor.
"I don't know that millennials will be that generation who benefits" from boomers' departure, Jessica Lautz, the deputy chief economist and vice president of research at the National Association of Realtors, told me. With the oldest millennials in their 40s, the bulk of the generation will have already purchased their first homes — stretching their budgets in the process — when boomers' houses finally become available.
That's not to say all hope is lost for millennials. As boomers really start to sell off their homes or downsize, the lucky millennials who've already bought a home will be thinking about moving into bigger places for their growing families. Many of these boomer houses will be in prime locations in cities like New York, Los Angeles, Chicago, and Dallas, Kushi told me. But millennials looking to gain a foothold in the market will have missed out on years of wealth building by that point.
I don't know that the silver bullet is waiting for baby boomers to need a smaller property, move in with family, or move into a senior center
When boomers eventually leave their homes, "we're going to see more existing-home inventory opening up," Nicole Bachaud, a senior economist at Zillow, told me in 2022 when I began writing about the gloomy outlook for millennials. "But that's a long time away."
The real winners in all this? Gen Zers. They've already gotten off to a stronger start on their homebuying journeys than previous generations did: An analysis from Redfin found that 30% of 25-year-olds owned their home in 2022, compared with a 27% rate for Gen Xers at the same point in their lives. (Millennials, meanwhile, were still struggling to match their parents: Redfin found that 62% of 40-year-olds owned their home in 2022, down from a 69% rate for boomers at the same age.) The oldest Gen Zers will be in their 30s in 2030, within the prime years for first-time buyers, Kushi told me. The Gen Z cohort is smaller than the millennial group and won't face as much competition from boomers, meaning they'll probably face less pressure in the market than the generation before them. A report from First American suggested the reduced demand could help narrow the housing shortage over the next decade. The timing of boomers' exit will mostly benefit younger generations, like Gen Z and Gen Alpha, who should find themselves on steadier footing than their predecessors.
The silver bullet
Boomers' passing won't have a simple trickle-down effect. Not all members of subsequent generations will want to live where baby boomers have settled down, and a lot of these homes will require updates to appeal to younger buyers.
"These dwellings, even if they're considered adequate, will still likely need a lot of work," Kushi told me.
Boomers' mere absence won't signal the end of the housing crunch either, Lautz told me.
"I think that we have to look beyond the boomers as a solution to the housing crisis," she said. "We have to be thinking about building and building more affordable inventory. I don't know that the silver bullet is waiting for baby boomers to need a smaller property, move in with family, or move into a senior center."
Inevitably, though, baby boomers will hand over the reins to the generations behind them. Demographic projections give us a pretty good idea of when this shift will happen and who will be best positioned to end up ahead in the long run. The timing may not favor downtrodden millennials, but things are looking up for their luckier, savvier younger siblings. Zoomers, rejoice.
James Rodriguez is a senior reporter on Business Insider's Discourse team.