Every day, more than 10,000 Americans turn 65, according to the US Department of Health and Human Services.
By 2030, the US Census Bureau says, 70 million Americans will be 65 years old or older. Historically, homeowners in that age group have sold their single-family home and moved into a smaller place, often in the Sun Belt, but experts say that’s not happening.
Baby boomers are booming, but they’re just not going to hit the residential real estate market the way some experts thought they would, according to Selma Hepp, chief economist for CoreLogic, a property data analytics firm.
“A few years back, we certainly heard about this cohort of people turning 65, and some said that there would be all this inventory of homes for sale,” Hepp said. “But we haven’t seen any of that happening yet. If anything, inventories are at historic lows and continue to decline year over year.”
She said one reason seniors are staying put is that home prices in some areas are about 40 percent higher than they were before the pandemic, and interest rates are soaring. Also, seniors are healthier than ever and staying in their homes longer, she said.
Instead of a wave of properties flooding the market, it will be more like a trickle.
“We do see an increase in home equity lines of credit,” she said. “People are adding secondary units to their property and making it more like multigenerational housing.”
Albert Saiz is the director of MIT’s Urban Economics Lab. He said that since today’s seniors are living longer, healthier, and more productive lives than previous generations did, it’s difficult to know what impact they’ll have on real estate, if any.
“Some of these older adults will retire, but some of them work longer,” Saiz said. “Some of these people are going to age in place, and some of them will downsize and move to the Sun Belt.”
Saiz said he’s glad that people have so many more choices than earlier generations, but that shift comes with unanticipated impacts on younger families who want to live in Greater Boston. The Boston economy has been growing and creating lots of jobs for decades, but we haven’t built enough housing to keep up with demand.
“There’s a mismatch now,” he said. “As people age in place, these households tend to be two people or sometimes one person in maybe a three- or four-bedroom home. Since they’re not downsizing as we expected, we have a huge, huge need for bigger homes to host younger families. No one talks much about it.”
According to a 2020 study of housing in Boston’s inner core (Brookline, Cambridge, Chelsea, Everett, Malden, Medford, Milton, Newton, Quincy, Revere, Somerville, and Winthrop) by the Metropolitan Area Planning Council:
“Across the region, approximately 45 percent of large units are occupied by an over-fifty-five household. Nearly 15 percent of large units — 114,000 homes — are occupied by an over-seventy household. While many of these seniors are staying in large homes because they want to, others may be interested in moving but have few other options in their community. As noted above, there are relatively few one- and two-bedroom units in many towns.”
Saiz said the scarcity of homes for sale does more than just drive up the cost of housing for Massachusetts residents, it also means people moving here — largely young families — have to live in smaller spaces.
The report estimates there were “1,800 overcrowded families with children in the study area from 2012 to 2016. Of these, over 7,000 were families of five or more people, who would need three or more bedrooms to avoid overcrowding; another 1,000 were families of four people currently in a one-bedroom unit.”
And the problem has worsened since then.
Saiz said the silver lining is that as the number of baby boomers who are over 65 peaks in a couple of years, it will begin shrinking, and that’s when many of those homes will begin trickling into the market, increasing the inventory of homes for sale and gradually decreasing the upward pressure on home prices.
“This generation is going to live longer than their forebears, so it is unclear how long we have to wait for that housing stock to be released,” he said. “We’re talking a very long time.”
He said the fact that accessory dwelling units (what used to be called “in-law apartments”) are becoming more common in Massachusetts is also good news for people who would like to age in place. Having a close friend or family member living on their property means help isn’t far away.
“You’re seeing it happening in California,” he said. “And you saw that happening also in Toronto and Vancouver, where they approved ADUs. We will definitely see a little bit of that going on. Whether the magnitudes are big enough to help us with our affordability problems, that remains to be seen.”
Marc Draisen, the planning council’s executive director, said he’s glad to see that more communities in the Commonwealth are allowing ADUs to be built —because every new unit of housing helps — but they are not going to play a significant role in solving the housing crisis.
“It’s taken us decades of underproduction to get us into this mess,” he said. “We need to climb out of this hole up several different stairways. ADUs is one set of stairs. Multifamily development is another one. Affordable-housing development is a third, and reigniting the development of single-family homes and duplexes and townhouses is also important.”
And by far the most important factor is construction.
“The biggest solution to this problem is to dramatically expand the supply of housing and make sure that a significant percentage of those new units are affordable to low- and moderate-income households.”