When Baby Boomers started families in the 1970s, builders
rushed to supply them with homes. By the 1990s, when boomers were more
economically secure and wanted bigger homes, the market responded.
In fact, between 1990 and 2010, boomers accounted for 80 percent
of the demand for new homes, said Arthur C. Nelson, director of the Metropolitan Research
Center at the University of Utah.
They wanted larger, more expensive homes, and builders delivered, he said.
Since 2010, however, boomer demand has been leaking out of
the single-family housing market. In coming years, that leak will become a
flood. Boomers, the demographic born
between 1946 and 1964, are hitting retirement age, the time when most people
look to downsize their housing.
That means that while the home construction business is
slowly recovering from the upheaval of the Great Recession, the housing market
is unlikely to return to the level of growth seen in the first years of this
century. No matter the number of new
housing starts, the types of products demanded by the market will change. Baby
boomers entering their senior years will begin to shed their large, detached
houses on spacious lots in favor of smaller living spaces in apartments,
condominiums or townhouses.
Between 1990 and 2010, the demand for large single-family
homes constituted 80 percent of the demand for new housing nationwide, Nelson
said, but that is starting to flip. From
2010 until 2030, the demand for large single-family homes will constitute only
12 percent of the total demand for new housing and multi-unit housing will
constitute 80 percent.
In some cities in the Midwest and the Northeast, the demand
for peak housing — large, expensive single-family homes — will actually be
negative which means some sellers will not be able to unload their homes
because there will not be enough buyers.
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