Urgent Update: U.S. Housing Market Faces Major Demographic Shift

URGENT UPDATE: The U.S. housing market is about to undergo a significant transformation, with analysts warning of a major demographic shift that could reshape homeownership across the country. Real estate expert Nick Gerli predicts that by 2033, deaths will outnumber births in the U.S., fundamentally altering demand for housing. This alarming trend stems from a report released earlier this year by the Congressional Budget Office (CBO), indicating a sharp decline in population growth.

This demographic shift matters NOW. For decades, the U.S. has grappled with a chronic housing shortage, where the demand for homes has consistently outpaced supply. Younger generations, in particular, face daunting challenges in securing homeownership, often overwhelmed by bidding wars against older, more affluent buyers and rising costs that make down payments increasingly unattainable. Current market conditions, with soaring home prices and escalating mortgage rates, are pushing many Americans to postpone family planning, further exacerbating declining birth rates.

Gerli, the founder and CEO of Reventure App, emphasizes that this impending demographic change could lead to a permanent downturn in homebuyer demand. He states that more deaths than births by 2032-2033 will result in “structurally lower homebuyer demand,” diminishing the urgency for young people to purchase homes. Concurrently, as the Baby Boomer generation ages, more homes will become available, increasing inventory across the market.

According to estimates from Freddie Mac, by 2035, the U.S. could see approximately 9 million fewer Baby Boomer homeowner households. Gerli warns that this could trigger a significant drop in home prices, leading to a more affordable market for potential buyers. “This will likely have a disinflationary and/or deflationary impact on home prices over the long term,” he stated.

The implications of this demographic trend will resonate from California to Florida, affecting states regardless of their current population growth rates. However, states like Florida are already experiencing a contraction, with a reported 4 percent decline in births.

Gerli points out that fewer families will reshape the housing landscape. Traditionally, larger homes have been favored for family stability, but with fewer families, the demand for spacious homes is likely to decrease. “The relative advantage of buying a house for raising a family diminishes,” he explained, suggesting a potential increased interest in smaller, more affordable homes.

“Many participants in the housing market are ignoring this issue, as if it does not provide a positive outlook for home prices,” Gerli noted on X. “Serious homebuyers and investors should dig in and understand how the demographic decline will impact their area,” he urged.

The CBO’s report emphasizes that without significant net immigration, the U.S. population could start to shrink as early as 2033, due to persistently low fertility rates. The report highlights that net immigration will play a crucial role in maintaining population growth in the coming decades.

Looking ahead, the demographic landscape of the U.S. will increasingly depend on immigration. While Gerli acknowledges the potential for shifts in trends over the years, he remains cautious. “Things could shift,” he said, referencing historical periods of population booms, such as the significant increase in births seen in the 1940s and 50s. “However, the current trends suggest a continuation of the slowdown in births,” he concluded.

As the U.S. housing market braces for these transformative changes, both buyers and investors are urged to closely monitor the evolving demographic dynamics that are set to reshape homeownership in America.