Regardless of the scenario, the projections indicate substantial increases in the number of older adults exiting homeownership over the next two decades. Between 2006 and 2016, the cohorts that reached age 65 or older by the latter year lost 9.2M homeowners. Between 2016 and 2026, cohorts passing into the same age range are projected to lose 10.5 million to 11.9M homeowners, depending on the projection scenario. Looking further out to 2026-2036, cohorts aging into the 65+ age range are projected to shrink by between 13.1M and 14.6M homeowners, a loss at least 42% greater than registered during the most recent decade.
Given that homeownership retention rates for older adults have been stable or rising, why do losses of older homeowners increase by so much in our projections? The reason is that the number of older homeowners ?at risk? of attrition due to advancing age will balloon as the large Baby Boomer generation moves full-force into the 65-and-older age group where homeowner retention rates drop substantially. In 2006, when the oldest Baby Boomers were only age 60, the 65-74 age group contained 9.3M homeowners. By 2016, when the oldest Boomers had reached age 70, the number of homeowners age 65-74 had swollen to 13.6M, thereby putting a substantially larger number of older owner-occupants at risk of exiting homeownership over the next ten years. By 2026, when the youngest Boomers will be age 62 and the oldest age 80, the number of owner-occupants age 65-74 is projected to jump again to about 16.4M, putting an even greater number of older owners on the precipice of aging-related homeownership attrition.
Although aging Baby Boomers will trigger the coming exodus of older homeowners, government and industry efforts to mitigate possible adverse market impacts will likely need to span the generations. Some efforts might seek to extend the period over which Boomers exit homeownership, as by providing home improvement financing options or community-based social support services that assist those who wish to age in place. Other efforts might focus on growing homeownership demand among Millennials, as by continuing recent efforts to provide sustainable home purchase financing options for first-time buyers, thereby helping the younger generation to build housing equity and eventually purchase homes vacated by aging Boomers. Because immigrants contribute substantially to homeownership demand growth, immigration policy will also likely play a role in determining the adequacy of replacement demand for the homes vacated by Boomers.
As these examples illustrate, efforts to ease the market impacts of the coming wave of older homeowner departures could take many forms. However, fostering a smooth intergenerational handoff of housing assets will likely require approaches that span the age spectrum and that seek to forge a bond of mutual housing market interests between old and young.
**excerpts from article by Dowell Meyers and Patrick Simmons for Fannie Mae via Economic Focus**