14 million US homes could change hands. What happens next?
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The projected increase in housing supply reflects a major demographic change. In 2026, the oldest baby boomers turn 80, an age when homeownership rates begin to decline more quickly.
Older Americans often remain in their properties well into retirement. However, changing health needs, moves into assisted living and deaths gradually reduce the number of homes occupied by older generations.
According to Realtor.com, baby boomers and the Silent Generation currently own and occupy approximately 36.7 million homes. That figure is expected to decline to 22.8 million by 2036.
The annual number of properties released is projected to increase from approximately 1.27 million in 2027 to 1.52 million by 2036. Baby boomers are expected to overtake the Silent Generation as the main source of these homes around 2029.
However, the process will take years rather than produce a sudden increase in properties entering the market.
Earlier research from Freddie Mac reached a similar finding. In February 2024, the mortgage finance company estimated that the number of baby boomer homeowner households would decline by 9.2 million between 2022 and 2035.
Its analysis suggested the decline would accelerate during the 2030s, as more homeowners reach their 80s.
Importantly, a property being released from owner-occupancy does not necessarily mean it will be listed for sale. Some homes may be inherited by family members, converted into rental properties or retained as investments.
As a result, the effect on housing inventory will depend on how many properties actually reach the market.
Why millions of additional homes may offer little relief to first-time buyers
The type of housing expected to become available may be more important than the overall number of properties released.
Realtor.com estimates that 9.9 million of the 13.9 million homes will have three or four bedrooms. These family-sized properties will account for approximately 71% of the projected supply.
Another 3.6 million homes will have five bedrooms or more.
By comparison, just 380,000 properties are expected to have two bedrooms or fewer. That represents an average of approximately 38,000 starter homes annually across the US.
This imbalance could limit the benefits for first-time buyers, many of whom are seeking smaller and less expensive properties.
The research also found that older Americans who own smaller homes are more likely to remain in them. Among homeowners ages 70 to 79, approximately 72.8% of those with starter homes own their properties outright, compared with 65.1% of owners of family-sized homes.
Without mortgage payments, these homeowners may face less financial pressure to sell or move.
The additional housing supply could therefore benefit existing homeowners more than those attempting to enter the market.
Households seeking larger properties may have more options as family-sized homes become available. Greater choice could also reduce competition and put downward pressure on prices in some locations.
There may be indirect benefits for first-time buyers if homeowners moving into larger properties sell their existing smaller homes.
However, this depends on wider housing market conditions. Mortgage costs, local demand and the availability of new construction will continue to influence whether younger households can afford to buy.
Realtor.com estimates that the US faces a housing shortage of approximately 4 million homes. The release of properties from older generations could help reduce that gap, but it will not automatically provide the types of homes buyers need.
How the housing transfer could affect prices and supply through 2036
The growing number of homes released by older Americans could change the balance between supply and demand in parts of the US housing market.
However, the effects are unlikely to be consistent across the country.
Markets with older populations and slower household growth could experience greater increases in housing availability. In these areas, additional listings may give buyers more negotiating power and reduce pressure on property prices.
By contrast, locations with stronger population growth, limited construction and high demand may continue to face supply shortages.
The size of the properties becoming available will also matter.
Realtor.com estimates that an average of 360,000 homes with five or more bedrooms could be released annually over the next decade. That figure is equivalent to approximately 67% of the recent annual listing volume for properties of that size.
If a substantial share reaches the market, sellers of larger homes may face greater competition.
Demographic changes could add to that pressure.
Research cited by Realtor.com from Harvard University’s Joint Center for Housing Studies projects average annual household growth of approximately 859,000 over the coming decade, below the annual average of 1.2 million since 2000.
Slower household growth could reduce demand for housing at the same time that more properties become available.
For real estate agents, developers and investors, these changes may require closer attention to local market conditions.
A growing supply of larger existing homes could affect demand for new family-sized developments, particularly in areas where population growth is slowing. Meanwhile, demand for smaller and more affordable properties may remain strong.
For homebuilders, the findings point to a continued need for entry-level housing. Building more properties that younger buyers can afford may have a greater effect on access to homeownership than relying on the transfer of existing homes.
The coming generational shift will gradually increase the number of properties available to future buyers. Yet its effect on affordability will depend on where those homes are located, how much they cost and whether they meet the needs of households entering the market.
Without a larger supply of affordable starter homes, the US housing shortage could persist even as millions of properties pass from one generation to the next.
Source:
Yahoo Finance
