As we close out the end of our year, we look back on the Real Estate market over of 2019, but also forward to what it may become. From home sale prices, inventory of homes, and so much more, we found this article in Phoenix’s Multiple Listing Service (ARMLS) November Statistics an interesting read.
“The Silver Tsunami” commentary by Tom Ruff:
“I have little confidence in forecasting beyond six months, but Zillow’s not afraid to project 20 years out. These are the same people that told us buying a home near a Starbucks offers the best appreciation value and an ‘8’ in your address means ‘make a fortune’ to Chinese buyers. This brings us to the soup de jour of housing stories, the Silver Tsunami.
Zillow research contends, ‘The massive Baby Boomer generation has already begun aging into retirement, and will begin passing away in large numbers in coming decades – releasing a flood of currently owner-occupied homes that could hit the market,’ concluding the U.S. is at the beginning of a tidal wave of homes hitting the market on the scale of the housing bubble in the mid-2000’s.
But an article published in NAHB NOW counters the Zillow research. ‘While it is difficult to accurately predict two years into the future – much less 20 years – here are the facts:
• Just because homes will turnover more in the future, does not mean home prices will fall. Turnover is fine, provided there is sufficient demand, and demand is generated by population growth.
• The U.S. Census projects that the U.S. population will grow by 25 million over the next decade.
• Of note, the 18 to 44-year-old population, which includes a significant share of the new construction buyer demographic, will increase by seven million from 2020 to 2030.
• Millennials – at 80 million strong – are the largest population group in American history and their median age is turning 30. This is significant because the median age of first-time buyers in the United States is in the
low 30s, so demand for single-family housing is rising.
• As the baby boomer generation shrinks and their homes hit the market, millennials and Gen Xers will be able to absorb this stock, plus provide enough demand for ongoing new home construction.”
Housing requirements are always going to be related to population. For those who like data, here’s a link to the population projections for Arizona.
The Zillow article also touched on Sun City:
‘The same demographics that propelled Sun City’s rise now pose an existential challenge to this suburb as baby boomers age. More than a third of Sun City’s homes are expected to turn over by 2027 as seniors die, move in with their children or migrate to assisted living facilities, according to Zillow. Nearly two thirds of the homes will turn over by 2037.’
This conclusion left me equally amused. When we view home sales in Sun City over the past 12 months, there were 1,477 single family residences sold. Public records tell us there are 19,605 single family residences in Sun City. At the current rate, 53% of the residences will sell, far greater than the alarming 33% mentioned in the article. As for 2037, based on current rates, 128% of the homes would sell. Sun City was a bad example to choose.
The story makes one final point. The homes owned by baby boomers are in places where younger people no longer want to live. This is nothing new. Phoenix saw urban flight in the sixties as the boomer’s grandparents aged
and their parents moved to the suburbs. We need to look no further than downtown Phoenix, which is now one of the most desirable places to live in the Valley. With a growing population base, real estate always finds a way to
For a further look at ARMLS stats, click here.