September 2024
It wasn’t that long ago when we anticipated a wave of home sales as baby boomers got older. As they became empty-nesters there was an expectation most would sell their large family home and move into a smaller and modern condo located closer to entertainment, activities and services of interest to them. Some called this downsizing although it is more accurately an upgrade better described as right-sizing as they move to a more suitably-sized space complete with luxurious features and amenities. These people no longer have a need for large living rooms or extra bedrooms.
This would have created a huge inventory of homes for sale causing many sellers to lower selling prices. This isn’t happening.
People are living longer, are healthier than earlier generations, and becoming empty-nesters later in life. For some, home prices are too high to financially justify right-sizing. They are choosing to remain in their family home as they age which can be frustrating to those hoping for a future of more homes for sale and lower prices.
Some are choosing to increase home equity lines of credit to renovate, and maybe add secondary units to their property for multigenerational housing or rental accommodation.
This has created a mismatch in the supply and demand for housing. Many homes with three or four bedrooms and larger condominium units only have one person living there and choosing not to right-size. There is a shortage of larger homes for younger families causing overcrowding as they are forced to live in smaller spaces.
This mismatch in housing is likely to peak in a couple of years as the number of baby boomers who are over 65 peaks, begins to shrink and the inventory of homes for sale begins to rise. This is expected to gradually decrease upward pressure on home prices.
