Debunking the Silver Tsunami: Why Boomer Homes Won't Flood the Market
Debunking the Silver Tsunami: Why Boomer Homes Won't Flood the Market
Forget the talk of a crashing housing market fueled by a "Silver Tsunami" of boomer sellers. Here's the truth: millions of boomers won't be flooding the market, and here's why.
Why the Hype is Overblown
While it's true boomers hold a massive chunk of wealth, they're not itching to sell. Many secured rock-bottom mortgage rates during the pandemic. Downsizing often means a higher payment – who wants that? Plus, boomers are the "remodel generation." They've upgraded their homes to age in place, making them less likely to budge.
Here's Why Inventory Will Stay Tight: Boomers Are More Likely to Hold On
Rock-Bottom Rates Keep Boomers Put
Rock-bottom mortgage rates from 2021 are a game-changer for many boomers. Why give that up for a higher payment? They'd rather age in place or explore alternatives like having adult children move in.
Multi-Generational Living is on the Rise
With boomers aging at home, their kids or grandkids are moving back in to help. This often leads to inheritance or buyouts within the family, keeping the house out of circulation.
Keeping it in the Family: The Power of Trusts
Savvy boomers will use trusts to ensure a smooth transition, bypassing probate and passing their homes on, likely to grandkids. This keeps the house out of the market. Proper asset protection is crucial to avoid medical costs, especially Medicaid, from placing liens on the property. (Look for an upcoming post about estate planning for your parents and grandparents.)
Downsizers Are Still Buyers: A Wash for Inventory
Downsizing boomers may sell their McMansions, but they'll likely compete with you for starter homes. This creates a wash in inventory, not a gain.
Low Rates Fuel Accidental Landlords
Downsizing boomers with investment properties, thanks to low rates, might become accidental landlords, squeezing out first-time buyers.
The Slow Rise, Slow Fall & Surviving Spouses
Boomers won't disappear overnight. It's a gradual wave, and younger generations are just as large. Plus, the housing shortage is already deep, according to Freddie Mac, and is likely to persist for years to come. Surviving spouses will also likely stay put or rent out their homes.
The Bottom Line
The housing market won't see a massive influx of boomer properties. This is good news for sellers but challenging for buyers. By being informed and taking action, you can navigate this market with confidence.
Homes are a Great Investment, But Don't Wait for Non-existent Cheap Houses
Owning a home is a great investment strategy! It offers the potential for appreciation, can help build wealth over time, and provides stability. However, don't base your buying decisions on the expectation of a wave of cheap houses hitting the market.
It's About Owners vs. Non-Owners: A Lifestyle Choice of Renting Could Leave You Out in the Cold
As a homeowner, you benefit from potential appreciation, tax advantages, and the ability to build sweat equity. Renting can be a suitable option for many, but it does limit these long-term financial benefits.
Don't Get Shut Out: Here's How to Stay Competitive
The housing market can be competitive, so here are some tips for buyers:
Boost Your Savings: Live frugally, prioritize saving for a down payment, and consider a "good enough" starter home.
Think Long Term: A modest first home can be a stepping stone to your dream house later. Consider renting out your first home to generate income.
Get Educated: Help your boomer family plan their estate. Trusts can save them (and you!) a probate headache.
Call to Action:
Get it the game. Make a plan. Save like crazy, and help your family undertand their estate planning options. Happy to brainstorm and come up with a solution that gets you a tangible and actionable plan that fits your unique situation.
Best,
Justin H Gazabat
Broker | PNW, Seattle, Ballard, East Side
Your Friendly Seattle Neighborhood Real Estate Professional.
www.JustinGazabat.com
P.S. I sincerely appreciate your continued trust and generous support of me and my business. It truly means the world to me when you think to connect me to your friends, family, and co-workers.
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