The “silver tsunami” — a colloquialism referring to aging Americans changing their housing arrangements to accommodate aging — could have more of an impact on the housing market this year, according to analyst Meredith Whitney in a conversation with Yahoo Finance.
“[T]he other major demographic trend you see is the aging of America,” Whitney said. “So what’s called the silver tsunami is 10,000 people a day turning 65. And by 2030, the entire baby boomer population or generation will be over 65.”
That will grow to encompass 21% of the total U.S. population, and when combined with the outsized rate of homeownership among older Americans, the potential exists to dwarf the most active year the U.S. has seen for home sales, she said.
“[T]he AARP estimates that 51% of people over 50 downsized their home,” she said. “And people over 50 are 74% of total U.S. homeowners. So if you just take half of that, you’ve got about 30 million homes that should be coming on the market. And the peak in existing home sales was 2005 when you had around 7 million transactions.”
Whitney referred to this trend as a “python” that could begin coming to fruition in the latter half of 2024, which could then persist “for the next several years,” she explained.
“[T]hat, I think, is what’s going to be reshaping housing in America,” she said. “And I think that’s what will put regional pressure in terms of more and less on home prices.”
Most housing analysts, including HousingWire’s Logan Mohatashami, say the silver tsunami’s transformative potential for the U.S. housing market has not yet materialized in any meaningful way, and few expect it to anytime soon. Boomers, the wealthiest generation, are increasingly staying in their homes, and the vast majority don’t have a mortgage or have one with a low interest rate.
Whitney says that home prices could moderate in the future because of its potential impact.
“[I]f you lower the overall home price, the serviceability becomes more affordable,” she told the outlet. “That’s what I think is invariably going to happen because you’re going to have more seniors, the silver tsunami, selling and there are fewer buyers so the give is going to be lower home prices.”
If this came to pass as Whitney predicts, then some seniors may not have as much of a need for a product like a traditional reverse mortgage through the Federal Housing Administration (FHA)’s Home Equity Conversion Mortgage (HECM) program. However, HECM for Purchase (H4P) — a comparatively lesser-used HECM variant — could be used to allow more older Americans to purchase a new home using a reverse mortgage.
H4P has struggled to gain traction in the already-niche reverse mortgage market, though some reverse mortgage industry professionals have aimed to amplify its potential among their peers.
Last October, FHA introduced a proposed seller credit for the H4P program. When news of this proposal reached attendees during a panel discussion at a recent industry event, audible cheers from the assembled professionals broke out.
But industry professionals also tend to see H4P as a bit of a hard sell for borrowers and, critically, real estate agent referral partners.