Something in salmon compels them to swim upstream. An invisible force calls swallows to return to Capistrano. And humans, primarily of the North American suburban variety, reach a certain age when they just gotta downsize.
Among the millions of baby boomers in America who were born between 1946 and 1964, that urge gets stronger every day as they turn 65 years old in droves. They're looking around at the big, nearly empty suburban homes they bought in an earlier phase of their lives, and they're concluding it's time to move to smaller, simpler quarters.
Get ready for the "Great Senior Sell-Off." That's what Arthur C. Nelson says is coming to the real estate market as the boomers — always a potent force in American culture and economics — decide to pour their homes onto the market. If he's right, it's not going to be pretty.
In an edited interview, Nelson, professor of urban planning at the University of Utah and executive director of the Metropolitan Research Center there, explained how these boomer homes for sale may number in the millions, and he doesn't think there will be enough buyers for them:
Q: What has led you to study what you see as an emerging momentum among boomers to get rid of their homes?
A: I've been active in residential development for 30 years, as a planner helping developers, as developer myself. Now as a professor of urban planning and finance, I study federal housing data and surveys of what people want in housing, based on their age, income and ethnic groups.
This is the decade of the shakeout, where the boomers will begin turning 65 and we'll begin to see how they influence the housing market. Work by other researchers has shown that when people hit their late 60s, they start selling off their homes at a much faster rate than they're buying. The boomers began turning 65 in 2011 and will continue to turn 65 to 2029. As they enter their late 60s, they'll begin to unload their homes in cumulatively higher rates. I'm calling it the Great Senior Sell-Off.
Q: And you don't think they'll find buyers in great enough numbers?
A: Between 2010 and 2030, the numbers of people in what would be their peak buying years will be growing, but they're still going to be a quarter of what (their numbers were) in the previous 20 years.
Another major factor is that the segment of the population that would historically have bought those homes just won't be able to afford them — the decline in educational funding means that this group won't have the education to get the higher-paying jobs.
Toward the end of this decade, I see 1.5 to 2 million homes from seniors coming on the market, and between 2020 and 2030, there will be a national net surplus of 4 million homes that they cannot sell. And that's a conservative figure.
Many current households with children will want to move up to these houses, but demographics and preferences have changed — about a quarter of those who would be considered in their prime buying years now want something else, like condos or town houses. And that's a significant change, because that kind of preference (from that buying group) used to be nonexistent.
Q: Don't you think the boomers themselves will be buying, in some form?
A: That's the surprising thing. They're going to rent. Seniors, when they reach 65, are homeowners — 80 percent of them own their homes, which is the highest homeownership rate of any age group. But currently, about 4 percent of senior homeowners move each year, and about 60 percent of them move into rentals of one kind or another. That number shocked me. I re-ran the numbers, and I had one of my crack doctoral students re-run the numbers. We went back through (the federal) American Housing Survey, and repeatedly, back to 2001, it was all the same — there's very little variation in senior buying/renting behavior.
I think you'll see a surge in construction of apartments for more affluent renters. Two-thirds of all new housing demand between 2010 and 2030 will be for rental housing.
Q: So much of the housing market during the boom years was in farther-out suburban areas. Are these suburbs going to be hurt by the lack of buyers for their homes?
A: I'm in the process of trying to nail down the effects on a metro-by-metro basis. I think some metros, demographically, will be OK, there will be a pool of buyers. Atlanta, Dallas, Houston, for example, may be OK. But in many metros, the near-in suburbs will do better than the outer-ring suburbs because of considerations of commuting costs.