Aging owners could free up 13.9M homes by 2036

Older Americans are expected to free up nearly 14 million homes over the next decade, gradually adding inventory to a housing market that has struggled with too few homes for sale.

But most of that added supply won't be starter homes.

Baby boomers and members of the Silent Generation are projected to release 13.9 million owner-occupied homes between 2026 and 2036, according to new Realtor.com research. About 9.9 million, or 71%, are expected to be three- or four-bedroom family homes.

Only about 380,000 will be starter homes with two bedrooms or fewer.

"The scale of this transition is unlike anything we've seen in the past decade, and it's accelerating every year," said Jiayi Xu, senior economist at Realtor.com. "The question for buyers and sellers isn't whether more homes are coming, but which homes, where and how many buyers will be there to meet them."

Boomers and the Silent Generation currently occupy an estimated 36.7 million homes they own. Realtor.com projects that number will fall to 22.8 million by 2036 as older homeowners die, move to care facilities, combine households or switch to rentals.

That would release about 1.39 million homes annually on average, although not all of those properties would necessarily be listed for sale.

Most of the released homes are expected to be family-sized. Realtor.com projects about 9.9 million three- and four-bedroom homes will be released over the decade, along with another 3.6 million homes with five or more bedrooms.

That could give trade-up buyers more choices and potentially help loosen other parts of the market. More family-home inventory could allow some owners of starter homes to move up, putting their previous homes back into the market.

Starter-home inventory, however, is expected to see much less relief.

Older generations own about 1.33 million homes with two bedrooms or fewer, but Realtor.com expects only about 380,000 to be released by 2036, averaging about 38,000 annually.

One reason may be that owners of smaller homes are more likely to own them outright. Realtor.com found 72.8% of starter-home owners ages 70 to 79 had no mortgage, compared with 65.1% of family-home owners and 58.9% of owners of large homes.

"The handoff is a welcome relief, but it is not big enough to solve the housing shortage issue alone," Xu said.

The projected turnover is about 34% higher than what older households released over the previous decade.

For real estate professionals, the shift is likely to be gradual rather than a sudden flood of listings. Realtor.com expects the added supply to be concentrated in family-sized and larger homes and in slower-growing markets, while entry-level inventory sees much less improvement.

The result could be more choices for move-up buyers, but much less change for first-time buyers still competing for affordable homes.

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