According to data from the American Housing Survey, from 1989 and 2009, 80 percent of new homes built in that era were detached single-family homes. A third of them were larger than 2,500 square feet. And most startling – “I checked my numbers over and over again,” a bemused Nelson says – 40 percent were built on lots of half an acre to 10 acres in size. Now, he says, 74 percent of new housing demand will come from the people who bought these homes, now empty-nesters, wanting to downsize.
As the Hispanic population expands, and more baby boomers retire, the gap between the two groups in the housing market – expressed in unsellable houses – will only widen.
“That’s going to hit us,” Nelson says. “Not right now. But my guess is that about the turn of the decade, that number will become a real number. It’s only a few percentage points now, but it’s like a glacier, and if it keeps moving and building and growing, it’s going to be a big number in about 2020.”
Roughly 7 percent of over-65 households move each year, and as people get older, their likelihood of moving from owning to renting gets higher and higher (it’s about 79 percent for households over 85). By 2020, there were will be around 35 million over-65 households in the U.S. That year, Nelson calculates, seniors who would like to become renters will be trying to sell about 200,000 more owner-occupied homes than there will be new households entering the market to buy them. By 2030, that figure could rise to half a million housing units a year.
“It’s romantic for the first 15 years when you’re turning 65 and retired,” he says. “But aging in place among 90-year-olds? 95-year-olds?” Many of these people, he predicts, won’t realize that they can’t mow the lawn or pay for repairs until they’re really elderly, and the market for the their homes has collapsed even further. “My suspicion,” Nelson says, “is that many hundreds of thousands, maybe millions of those households in the 2020s to 2030 and beyond will simply give up the house and walk away.”
Our most recent housing crisis targeted all age demographics, including large numbers of young families and first-time homebuyers. The coming problem, Nelson predicts, will originate with – and primarily affect – America’s aging grandparents already well into their retirement.
Suburban Baby Boomers hoping to age in place are beginning to put new demands on our transportation system, according to a recent New York Times article. Once they can no longer drive, many older folks find themselves needing in-home services or drivers that can offer more assistance than many taxi or TNC drivers are used to providing.
Private companies and healthcare providers are stepping in to fill that gap in many places. But where they aren’t, transit agencies could face more pressure to provide new services—including costly paratransit services. According to Brookings, those costs have already quadrupled since 2000 in many areas.
On the other hand, while Boomers do seem to be hanging on to their homes longer than expected, several studies suggest that’s about to change in a major way. It’s not clear how the housing market will play out, but this could shift transportation needs away from the exurbs toward more central locations.
Analysts from George Mason University, Fannie Mae, and the University of Southern California indicatethat a ‘baby boomer sell-off’ is not far off. And when that happens, they argue, there might not be enough younger buyers to soak up all the supply. Researcher Arthur C. Nelson made the same point back in 2013. “The Boomers in the exurbs are going to be in a real pickle,” he said.
This is important for DOTs as they think about where to make the most critical transportation investments. If these older folks move inward, demand for transit and other urban transportation options could increase. And if younger generations do end up buying those suburban houses, it could be unwillingly for many of them. We discovered from the most recent National Household Travel Surveythat younger folks making the most money continue to drive less each year, which could signal continued growth in urban areas.
While there’s no way to know for sure what will happen, the travel demand models that many agencies rely on to evaluate future transportation investments could be misleading them. Unless planners are deliberate about testing these different possible growth patterns, their models likely assume a single outcome, which in many cases is continued suburban growth.
Chris McCahill is the Deputy Director at SSTI.