Almost everyone who’s been looking to buy a house or condo around Boston in the past few years has encountered the same frustrating challenge: There just aren’t enough homes for sale, particularly as some would-be sellers wait out the COVID-19 pandemic and construction in Boston at a stop.
With only 8,163 single-family homes and 3,132 condos for sale statewide in February, housing inventory was at its lowest point for that month since at least 2004, according to the Massachusetts Association of Realtors. That’s not a mere winter blip: February’s year-over-year decline in single-family homes for sale was the 96th drop in 97 months.
After a slight buildup in inventory last year, low interest rates brought out home buyers in full force this winter, said Zillow economist Jeff Tucker, driving inventory way back down. “And that’s usually a good leading indicator that prices are going to heat up and that buyers in general will have a harder time — a harder time getting their offer accepted and a harder time finding the right fit for a home,” Tucker said. It’s a familiar backdrop for stressed-out home buyers.
But that could change for buyers who are willing to wait things out — like, really wait them out. Say, for a decade. That’s because America’s enormous baby boomer population — those born between 1944 and 1964 ― is getting older; about a third of US homeowners are over 60. Many of them will age in place, but others will eventually find their homes too much to manage and move into retirement communities, assisted-living facilities, or family members’ homes to ride out old age.
A Zillow analysis found that the additional housing freed up by aging boomers over the next two decades will provide “a substantial and sustained boost to supply” on par with the construction boom of the early- to mid-2000s. In an ordinary year, about 730,000 homes are released into the US market by seniors ages 60 or older. From 2017 to 2027, though, that number is expected to rise to 920,000 a year. And from 2027 to 2037, aging homeowners will vacate about 1.17 million homes annually — introducing nearly half a million additional homes into the market each year compared with today’s rate.
This generational turnover will affect areas in different ways. Interestingly, fast-growing Sun-Belt cities that have been drawing young people with their combination of warm weather, jobs, and more affordable homes — such as Houston, Atlanta, and Austin — won’t see nearly as much inventory freed up by aging boomers. “Those are pretty young cities, so there’s not that many older folks, because the cities were so much smaller 40 or 50 years ago,” said Tucker. “There just weren’t that many people living there in the ‘80s compared to today.”
Meanwhile, some areas are far more boomer-heavy than others, such as traditional retirement communities in Florida, Arizona — and even Cape Cod. But Tucker said as long as such places remain popular with retirees, they shouldn’t see a dramatic drop in home values even as a glut of housing hits the market. He’s more concerned about places with shrinking populations, where lots of older residents remain from the legacy of an earlier economic boom — including Rust Belt cities like Cleveland, Pittsburgh, and Dayton, Ohio. “Those are the places I’d be most worried about this really hurting the real estate market by dragging down house prices or creating a wave of foreclosures,” Tucker said, “because there’s not a steady supply of new residents who want to buy those homes.”
There’s also the question of a potential mismatch between that new supply and future demand — that is, whether young buyers will even want the homes that boomers leave behind, many of which are big houses in the suburbs.
“That suburban housing stock is not as desirable as it used to be,” said Hudson Santana, of the Santana Properties Team at Keller Williams Realty in Cambridge. “You’re seeing more people who want to stay in urban areas. They can walk to a cafe, they have all those conveniences, they don’t want to be stuck in a car for 45 minutes to get home or get to work.”
Boomers who bought their current homes while in or approaching retirement were probably less concerned with their commute time to the city center, Tucker said. “Because if they’re retired, then they’re not commuting anymore. So that’s part of the mismatch problem,” he said. But even longtime family homes may be too far from the city to appeal to young buyers. “Even if it’s a home they bought in the suburbs 15 or 20 years ago, traffic congestion has only gotten worse in most places, so something that seemed like a pretty easy drive before may not be anymore.”
In Massachusetts, about a third of all homeowners are 55 or older, but that number is quite a bit higher in some communities — most of which are well outside of Boston. More than half of homeowners are over 55 in Boxford, Duxbury, Hanson, and Rockport, for example.
Tucker suggested that the millennial “back to the city” movement has been overstated at times, but notes that there is definitely an increased interest in walkable access to restaurants, shops, and bars, as well as an easier commute. “That’s really important, and has clearly shifted in the last generation,” he said. “So the places that thread that needle best are sort of inner-ring suburbs, or they’re sometimes called ‘streetcar suburbs.’ ”
In that respect, older Bay Staters are sitting on some prime property. More than 40 percent of homeowners in desirable inner suburbs like Newton, Wellesley, Milton, Lexington, Winchester, and Needham are over 55, according to census data. In Dover, more than half of homeowners are over 60.
In fact, that slew of new suburban inventory might be located where it’s needed most. Housing supply has almost always lagged demand in the Boston area, said Alicia Sasser Modestino, professor of public policy at Northeastern University and lead author of the 2019 Greater Boston Housing Report Card. Development has picked up in recent years, but a handful of communities — including the city of Boston — are carrying way more than their fair share when it comes to approving and building new housing. “It’s really a lot of the suburbs that are lagging behind,” she said.
So the bigger question — around Boston, at least — might be whether younger generations will be able to afford those homes that boomers leave behind. “I don’t know who can afford to buy in their parents’ community anymore,” said Mary Gillach, founder of the Gillach Group at William Raveis Real Estate in Chestnut Hill. “My kids can’t afford Brookline. I couldn’t even afford Brookline if I had to buy again.”
There’s also the matter of whether young buyers can look past the outdated finishes or deferred maintenance common to some estate sales. When an elderly couple sells their longtime home, Tucker said, “even if they’ve been maintaining it well, it still may simply not match today’s design trend — it will look painfully outdated in many cases.”
Modern buyers, meanwhile, have shown little appetite for fixer-uppers. “The average millennial buyer wants a property that’s already fixed up and in good condition,” said Marie Presti, owner/broker at the Presti Group in Newton and Stoneham. “It’s the rare millennial buyer who is willing to take on a project,” she lamented, even though they could build more equity that way.
Sometimes it just comes down to math. It’s one thing to qualify for a mortgage on a $1.2 million move-in ready home, Gillach said. “[But] if you’re buying an $800,000 home and you have to put $400,000 into it — who has that kind of money sitting around?” she asked.
Regardless, the flood of boomer-owned homes remains years away — a trend that will ramp up over the next 10 to 20 years, Tucker said, but is of little immediate help to 2020 home buyers. While some retirees are trading suburban mansions for maintenance-free downtown condos, most boomers aren’t behaving much differently from previous generations, Tucker said. “There’s a lot of talk about downsizing but very little action on it,” he said. “And I think part of the reason is, for a lot of people, packing up and moving is really hard! And it’s even harder the older you are or the less able you are to handle a lot of those difficult tasks.”
And with boomers spending more money on home improvements than any other generation in 2017, according to Harvard’s Joint Center for Housing Studies, they have even less incentive to leave. “People who have been working on their homes, outfitting their homes to their own preferences, feel pretty comfortable with where they are,” Tucker added.
“That boomer generation is working longer, they’re staying in their homes longer, they’re aging in place a lot,” Modestino said, “so this mass exodus at age 65 is not what’s going to happen.”
But give it another 10 years, and you might finally land an offer on that Newton or Needham Colonial, maybe even without a bidding war. “Especially in older cities like in the Boston metro area, there’s a significant number of baby boomers who will be vacating homes in the inner suburbs … and I think those will be in extremely high demand,” Tucker said. “There will be a lot of backyards where people will be putting up swing sets again for the first time in 30 years.”
Jon Gorey is a regular contributor to the Globe Magazine. Send comments to firstname.lastname@example.org.