A 'Silver Tsunami' Is About to Upend the Housing Market, Says Analyst Who Accurately Predicted the 2008 Financial Crisis A rash of Baby Boomers nearing retirement are expected to start downsizing next year.
- Meredith Whitney predicts that housing prices will decrease and the supply of homes for sale will increase starting in 2024 due to a "silver tsunami" of baby boomers downsizing.
- More than 30 million units of housing are expected to be brought onto the market as 51% of people over 50, who own more than 70% of U.S. homes, downsize to smaller homes.
It's been a challenging time for hopeful homebuyers amid soaring prices and mortgage rates, but a little bit of good news might be around the corner.
During the Yahoo Finance Invest Conference, Meredith Whitney, who accurately predicted the 2008 financial crisis and became known as "the Oracle of Wall Street," said that housing prices will fall in 2024 due to a "silver tsunami" of baby boomers who are expected to downsize in the coming years.
Image Credit: Bloomberg | Getty Images. Meredith Whitney.
Highlighting estimates from AARP, Whitney said that over 51% of individuals aged 50 and above, who own more than 70% of U.S. homes, are projected to move into smaller residences. This downsizing trend could result in over 30 million units of housing being brought onto the market.
The supply-demand dynamics are shifting as the supply of homes for sale increases while prices decline, fueling a multi-decade cycle that will start in late 2024 and continue into 2025, Whitney said, per Yahoo.
With older Americans sitting on a significant amount of home equity, higher mortgage rates are unlikely to impact downsizing decisions.
The decision to downsize often hinges on someone's retirement timeline. Although roughly half of retirees ages 50 and up do move into smaller homes after retirement, three in 10 actually move into larger homes to accommodate visitors, per a Merrill Lynch retirement study.
But Whitney cautioned that there may not be enough younger buyers to sustain the housing market. Sellers may be compelled to sell at lower prices to secure gains. Although she acknowledged the risk associated with this shift, she emphasized the importance of prices aligning with interest rates.