As the U.S. continues to face a shortage of available homes, 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 own will fill the deficit, thus bringing housing costs down.
However, those units aren’t likely to be the solution, Orphe Divounguy, a senior economist at Zillow, tells CNBC Make It.
The reason is simple: Empty nesters — which Zillow defines as “residents ages 55 or older who have lived in the same home for 10 or more years, have no children at home and have at least two extra bedrooms” — don’t live in the same places where younger generations want to be, recent research finds.
“These empty-nest households are concentrated in more affordable markets, where housing is already more accessible — not in the expensive coastal job centers where young workers are moving and where more homes are most desperately needed,” Divounguy said in the report.
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.
“Unless we see more businesses and workers relocating to the Midwest, 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.
New construction faces a number of roadblocks
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.
Lowering costs for builders will be key to making progress in this area, Divounguy says. Changes to zoning laws and streamlining building permit approvals may also help push things in the right direction.
“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.”
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