Baby Boomers to Flood Housing Market, Offering Little Relief for First-Time Buyers
A significant increase in home sales expected over the next decade will primarily involve larger properties, not the starter homes desperately needed by younger generations.
Millions of homes owned by Baby Boomers and the Silent Generation are expected to enter the U.S. property market over the next decade, a significant increase from the previous ten years, according to an analysis by Realtor.com. However, this demographic shift is unlikely to provide substantial relief for first-time homebuyers who are struggling with high prices and low inventory.
Between 2026 and 2036, an estimated 13.9 million homes are projected to be released onto the market by these older generations. This represents a 74% increase compared to the number of homes they released in the preceding decade. The number of homes owned and occupied by Baby Boomers and the Silent Generation is expected to decrease from 36.7 million to 22.8 million by 2036, indicating a substantial volume of properties that could change hands.
The pace of these home releases is anticipated to accelerate, moving from approximately 1.27 million homes in 2027 to 1.52 million by 2036, averaging 1.39 million homes annually. These properties become available through various life events such as death, relocation to assisted living, downsizing, household consolidation, or a transition from homeownership to renting.
Despite the large numbers, the composition of these upcoming sales poses a challenge for entry-level buyers. Of the 13.9 million homes expected to be released, only about 380,000 are predicted to be starter properties with zero to two bedrooms. The vast majority will be larger homes: 9.9 million are family homes with three or four bedrooms, and an additional 3.6 million will be large homes with five or more bedrooms.
This imbalance means that while the overall housing market might see increased supply, the segment most critical for new buyers is expected to remain constrained. Projections suggest only about 38,000 starter homes per year will be released over the decade, a figure that represents a small fraction of recent starter-home listings. Furthermore, older homeowners are particularly inclined to retain smaller properties, with an estimated 70.7% of starter homes expected to remain with current owners over the next ten years.
Nadia Evangelou, principal economist and director of real estate research at the National Association of Realtors, noted that many older homeowners are remaining in their homes longer, limiting turnover, especially at more affordable price points. She also pointed out that higher borrowing costs are making it increasingly difficult for younger generations to enter the market and build wealth.
The primary impact of the demographic shift is expected to be on the supply of larger homes. The projected release of 9.9 million family homes and 3.6 million large homes could offer more choice for buyers looking to trade up. This could indirectly benefit first-time buyers if existing homeowners move into these larger properties and subsequently free up their smaller homes.
Realtor.com does not anticipate a nationwide housing market crash as a result of this trend. Instead, the analysis suggests a gradual and uneven softening, potentially concentrated in specific markets and property types. The areas expected to see the most significant release of properties owned by older homeowners are largely located in the Rust Belt and Midwest, rather than the expensive coastal regions where affordability issues are most acute.