While some anticipate an influx of homes from 'empty nesters' as older residents downsize, Zillow economist Orphe Divounguy argues this trend won't alleviate the housing shortage in expensive coastal cities. Empty nesters are concentrated in more affordable markets, not where young workers are seeking jobs and housing. The report suggests new construction in cities facing the largest shortages is the key to improving affordability.
, some may be looking at those occupied by" empty nesters " as an incoming source of inventory. As older residents begin to downsize, the thinking goes, the millions of homes they currently ownHowever, those units aren't likely to be the solution, Orphe Divounguy, a senior economist at Zillow, tells CNBC Make It.
Around 20.9 million households fit the definition of empty nesters in 2022 and out of the 50 biggest U.S. cities, they have the greatest concentrations in Pittsburgh, Pennsylvania; Buffalo, New York; and Cleveland, Ohio. But the cities with the most people under 44 are San Jose, California; Austin, Texas; and Denver, Colorado, Zillow reports., the big flow of housing coming is probably not going to do much to help those markets," Divounguy says.
And of course, the homes empty nesters are vacating might not be the same properties young people are looking for, especially if they are large or relatively expensive for the area.This couple retired in their 30s in 1991 and have no regrets: ‘It just keeps getting better'So, what will actually move the needle? The"only viable solution for improving housing affordability" is new construction in the cities facing the largest shortages, Divounguy says.
However, there are a number of roadblocks preventing construction from keeping up with demand, including the rising costs of building materials, lot size requirements, density restrictions and project reviews that can take up to 24 months. "When you prevent supply from keeping up with demand, you end up with runaway prices and affordability deteriorates," Divounguy says.Changes to zoning laws"If you look at places that are less regulated," he added,"like in the South, builders have been able to lean into density in order to continue building houses at a price point that meets buyers where they're at."to learn about common passive income streams, tips to get started and real-life success stories.
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