The Impact of Empty Nesters on the Housing Shortage

Anya’s Market Bites:

The U.S. housing market continues to grapple with a shortage of available homes, leading many to wonder if empty nesters might provide a solution. Here’s a breakdown of why this might not be the case and what could truly address the housing crisis:

Why Empty Nesters Won’t Solve the Housing Shortage

• Definition of Empty Nesters:

  • Zillow defines empty nesters as residents aged 55 or older who:

    • Have lived in the same home for 10 or more years.

    • Have no children living at home.

    • Have at least two extra bedrooms.

• Location Mismatch:

  • Empty nesters are largely concentrated in affordable markets where housing accessibility is less of an issue.

  • Younger generations seek housing in expensive coastal cities with job opportunities, where inventory is most needed.

• Statistics:

  • In 2022, approximately 20.9 million households were classified as empty nesters.

  • Cities with the highest concentrations of empty nesters include:

    • Pittsburgh, Pennsylvania

    • Buffalo, New York

    • Cleveland, Ohio

  • Cities attracting younger populations under 44 include:

    • San Jose, California

    • Austin, Texas

    • Denver, Colorado

• Mismatch in Housing Preferences:

  • Homes vacated by empty nesters may be large or relatively expensive for their areas, making them less appealing to younger buyers.

The Real Solution: New Construction

• Key to Affordability:

  • New construction in cities with the highest demand is the only sustainable way to improve housing affordability.

• Barriers to Construction:

  • Rising costs of building materials.

  • Lot size requirements.

  • Density restrictions.

  • Lengthy project review processes (up to 24 months).

• Consequences of Limited Supply:

  • When housing supply fails to meet demand, prices soar, and affordability worsens.

How to Promote Construction

• Lowering Builder Costs:

  • Reducing material costs and simplifying zoning laws can incentivize builders.

• Streamlining Approvals:

  • Faster building permit approvals can accelerate the construction process.

• Success in Less-Regulated Markets:

  • In less-regulated regions, such as the South, builders have leaned into higher-density housing to meet demand at competitive price points.

Final Thoughts

While empty nesters’ homes may add some inventory to the market, they are unlikely to resolve the housing crisis. Instead, targeted efforts to encourage new construction, especially in high-demand urban areas, are critical to creating sustainable and affordable housing solutions. By addressing regulatory and cost barriers, we can build the homes that truly meet the needs of today’s buyers.

(Source: NPR)

All the best,

Anya Derebenskiy

(949) 942-5183

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