Though the housing market has been picking up over the last few months, a new study conducted by researchers from the University of Arizona predicts that things may not be favorable for some homeowners over the long-term.
According to researchers, older consumers who are looking to sell their homes in the years ahead could have trouble finding buyers. Their work revealed that costs associated with homeownership could prevent millennials and members of Generation Z from pulling the trigger and becoming homeowners themselves.
“There’s this mismatch -- if those over 65 unload their homes, and those under 65 aren’t buying them, what happens to those homes,” said researcher Arthur C. Nelson. “...The vast supply is so large and the demand...is going to be so small, in comparison, that there’s going to be a real problem starting later this decade.”
Homeowner trends are changing
To understand where the housing market is expected to turn in the next two decades, the researchers analyzed data from both the Harvard Joint Center for Housing Studies and the U.S. Census Bureau. They looked at the average age of homeowners from 2018 and then used available data to predict what the housing market will look like by 2038.
The researchers expect that housing trends are likely to change drastically over the next 20 years, but consumers shouldn’t expect a switch to flip overnight. Based on their findings, the changes will happen slowly and will depend on the geographic region.
In bigger, metropolitan areas, older consumers looking to sell shouldn’t have as much of an issue. However, it could become rather difficult for those in smaller, lesser known areas. The researchers explained that this trend will likely affect millions of consumers nationwide.
“The people who own homes now in thousands of declining communities may simply have to walk away from them,” Nelson said.
As 2040 draws closer, the researchers predict that the number of homeowners under the age of 65 is likely to be lower than it was in 2018. This is particularly concerning for older consumers, many of whom use the sale of their homes to help finance retirement plans.
Helping older consumers
Nelson and his team have come up with several ideas that could help offset the housing burden that older consumers will face in the coming years. One plan would be to divide bigger homes into several units. This would make selling less necessary, and the full cost of living in a large home wouldn’t fall on one person.
The researchers also believe that more government intervention could benefit both older and younger consumers -- and the housing market at large.
“We’re going to wake up in 2025 -- give or take a few years -- to realize that millions of seniors can’t get out of their homes and that it’s going to get worse in the 2030s,” Nelson said. “We must start doing things now to reduce the coming shock of too many seniors trying to sell their homes to too few younger buyers.”