2020 was the first year in US history when the construction of new homes and apartments exceeded population growth. Why did this occur? Because America is getting older. Births are dropping to record lows each new year while deaths are hitting record highs. This means that the US has entered a secular growth decline that will be impossible to escape from.
As a result of these shifts, Baby Boomers and Seniors account for an increasing share of Households and Homeownership in America. Back in 2005 the 55+ age demographic accounted for 40% of homeownership. Today it’s over 55%! The growth in senior home demand has come with a big decline from Millennials. Today there are fewer 25-34-year old home owners than 75-84-year old home owners!
While the expensive cost of buying a home is pricing many Millennials out of the market, and keeping homes in the hands of Seniors and Baby Boomers, the biggest cause of this demographic shift is even simpler: aging. The only growth segment of real estate demand in the US are Baby Boomers/Seniors (65+). All other age segments, including Millennials (25-44), Gen X (45-64), and Gen Z (25 and younger) are showing declines in household formation. That’s not good for the health of the Housing Market.
What does this mean? Well, very soon, many of the Senior/Baby Boomer Homeowner will begin to either: 1) Move in with Adult Children, 2) Go to a Senior Living Community, 3) Enter a Nursing Home, or 4) Pass Away. All of these things will reduce the demand for homes in America, thereby increasing inventory and reducing prices.
Of course, these shifts will be felt in some cities across the country first. In fact, areas in the Midwest, Florida, Arizona, and California are already starting to feel the impacts of this demographic shift. Stay tuned to a future video where we explore which cities will experience the biggest demographic decline!
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0:00 Demographic Freight Train
2:08 Millennials Pushed out of the Market
4:12 America is AGING
5:42 Growth in Demand from…Seniors!
7:56 The Problem: Nursing Homes, Death
9:16 More Seniors Alone; Less Married with Kids
11:33 Owners Now? Renters or Worse Later
13:03 TIMING the Demographic Implosion
14:59 City by City Variation
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