Why a 'silver tsunami' of empty-nesters won't solve the housing crisis

(NewsNation) — The U.S. is short millions of homes, but don’t expect empty-nest baby boomers to solve the problem.

According to a new analysis by Zillow, the so-called “silver tsunami” — a wave of older homeowners selling their homes in order to downsize — is unlikely to solve the affordability crisis.

That’s because supply and demand don’t match up on the map.

“These empty-nest households are concentrated in more affordable markets, where housing is already more accessible — not in the expensive coastal job centers where young workers are moving and where more homes are most desperately needed,” Orphe Divounguy, Zillow senior economist, said in the report.

In 2022, there were 20.9 million empty-nest households nationwide compared to 8.1 million families who needed their own place. However, empty-nesters tend to be in Midwest and Southern markets, which are some of the least expensive in the nation.

Of the 50 largest U.S. metros, Pittsburgh had the highest share of empty-nest households in 2022 at 22%, followed by Buffalo (20%), Cleveland (20%), Detroit (19%), St. Louis (19%) and New Orleans (18%), according to Zillow.

In addition to being relatively affordable, those areas also have lower demand, with fewer heads of households younger than 44.

In other words, there’s a major gap between the potential housing supply from empty-nest households and the potential demand from younger residents.

On the other hand, empty-nesters make up a smaller share of the housing market in cities like Austin (10%), Denver (13%) and San Jose (14%) — cities attracting some of the largest shares of millennials and Gen Z’ers.

“Housing affordability in these metros is far more challenging than at the national level, and all of them have a smaller share of empty-nest households than the national average,” Zillow noted.

Nationwide, empty-nesters accounted for 16% of all households in 2022, down slightly from 17% before the pandemic.

Zillow defined “empty-nesters” as residents age 55 or older who have lived in the same home for 10 or more years, have no children at home and have at least two extra bedrooms.

Other research suggests the “silver tsunami” may look more like a silver ripple as elevated interest rates and limited supply deter empty-nesters from selling.

Empty-nest baby boomers owned nearly 30% of large U.S. homes in 2022 — double the share owned by millennials with kids, according to a Redfin analysis earlier this year. A decade earlier, young families were just as likely as empty-nesters to own large homes.

Part of that shift is explained by the “lock-in effect,” an uptick in homeowners reluctant to sell because they would have to give up their lower mortgage rates. There’s also a shortage of accessible homes, leaving aging empty-nesters with few options even if they want to downsize.

The solution, Zillow said in the analysis, is to build more homes. Zillow research shows that housing shortages are the most severe in markets with more land-use restrictions.

Those restrictions have tightened supply, driving home prices to all-time highs and pushing home ownership out of reach for millions of Americans.

From 2017 to 2022, the number of families doubling up — living with nonrelatives — grew by more than 500,000, according to Zillow. However, the rate of doubling up with nonrelatives is much lower where housing is already more available.

“Unfortunately, this future supply coming from empty-nest households doesn’t line up with the areas of greatest need on the map,” Divounguy said.

The ten U.S. metros with the largest share of empty nest households, according to Zillow: