Baby boomers have long accounted for a significant portion of the housing market, so how will the market be impacted by the aging of this large generation? Are we heading toward a “generational housing bubble?”
Fannie Mae’s  Economic and Strategic Research Group teamed up with the University of Southern California to answer this question in a new Housing Insights report, titled, “The Coming Exodus of Older Homeowners.” 
Currently, baby boomers, those born between 1946 and 1964, live in 46 million owner-occupied homes with a total combined value of $13.5 trillion, according to the research.
As baby boomers enter their 70s, the report said, “we can expect many to leave the housing market for rentals, senior care facilities, or even death.”
“With the oldest boomers now in their early 70s, the beginning of a mass homeownership exodus looms on the horizon, fueling fears of a ‘generational housing bubble’ in which homeownership demand from the younger generations is insufficient to fill the void left by multitudes of departing older owners,” stated Dowell Myers of the University of Southern California and Patrick Simmons of Fannie Mae in their report that was published on the Fannie Mae blog .
Examining historical and recent homeownership trends among older Americans, the researchers sought to predict how many older homeowners would leave the market over the next two decades.
Between 2006 and 2016, 9.2 million Americans who reached age 65 or older during the decade transitioned out of homeownership, the report indicated. Over the next 10 years, from 2016 to 2026, the researchers anticipate another 10.5 million to 11.9 million homeowners exiting their homes. Over the following decade, between 13.1 million and 14.6 million older Americans will exit the housing market.
“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,” Myers and Simmons explained.
The researchers pointed out some possible ways to “ease the market impacts of the coming wave of older homeowner departures,” such as offering home improvement financing and social services for those who wish to age in their homes instead of moving.
Another way to ease the impact is by helping the millennial generation to replace some of the boomers as they exit the market by ensuring “sustainable” financing options for first-time buyers.
The report pointed out that “immigration policy will also likely play a role in determining the adequacy of replacement demand for the homes vacated by boomers” because “immigrants contribute substantially to homeownership demand.”
“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,” Myers and Simmons said.