9 million homes will come on the market in the next decade as baby boomers age

9 million homes will come on the market in the next decade as baby boomers age—but the 'silver tsunami' will be more of a 'tide,' Freddie Mac says. A wave of downsizing and declining homeownership rates among baby boomers is expected to bring more than 9 million homes onto the market in the next decade

There will be 9.2 million fewer baby boomer homeowner households by 2035, according to a recent analysis published by Freddie Mac.

While economists at Freddie Mac estimate that the number of baby boomer homeowner households will decline from 32 million in 2022 to 23 million by 2035, they don’t anticipate this picking up steam for a few more years. They say what some have called a “silver tsunami” will really be more of a “gradual reduction.”

“Over the next five years, the decline is more modest, and we only see a reduction of 2.7 million households by 2028. In this sense, the silver tsunami is more like a tide, with a gradual reduction phasing in over several years. While the number of people aging out of homeownership will increase in the coming years, it is more of an upward sloping trend than a disruptive spike,” wrote Freddie Mac economists in the report.

Despite some predictions of a “silver tsunami” in 2024, Freddie Mac only expects a 300,000 net decline this year in the number of baby boomer homeowner households. It expects this annual decline will accelerate pretty much every year for the remainder of the decade.

In 2027, Freddie Mac expects a 600,000 net decline in the number of baby boomer homeowner households. In 2031, it projects a 900,000 net decline in the number of baby boomer homeowner households. In 2035, it expects a 1.2 million contraction.

How will this baby boomer selloff impact the U.S. housing market?

For at least the next few years, economists at Freddie Mac believe that the housing demand from Gen Z and millennials can compensate for the selling off of baby boomer households.

“In our October 2023 Outlook, we presented estimates showing that there were as many as 2 million potential additional households in the millennial generation. Along with increases from Gen Z, total housing demand over the next few years is likely to continue to increase even as the boomers continue to exit the market. Over at least the next five years, we expect the increase in the young adult homeowner households to more than offset the decline in boomer homeowner households,” wrote Freddie Mac economists.

But what about further out? Will this baby boomer selloff affect home prices in the 2030s? Nik Shah, CEO of Home.LLC, thinks so.

“While we are bullish about home prices in the 2020s, we are still bearish about home prices in the long term unless immigration compensates for declining birth rates,” Shah recently told ResiClub. “In the 2030s, [housing] demand will start falling because Gen Zs will make a smaller cohort than millennials plus will face a steeper affordability challenge. At the same time, supply will increase as boomers age.”