For years housing analysts talked about the coming “silver tsunami.” The idea was that as baby boomers aged, millions of homes would eventually hit the market as owners downsized, moved to retirement housing, or passed homes on to their heirs. Because baby boomers own such a large share of the nation’s housing stock, many believed this transition would release a wave of inventory that would help relieve housing shortages, especially for entry level buyers.
That wave has not arrived, at least not yet, and the St. Louis market illustrates why.
A large portion of the region’s housing stock is owned by older homeowners who simply are not moving. The St. Louis metro area has a median age of about forty, slightly older than the national average, and roughly one third of owner occupied homes are owned by households age sixty or older. That represents a substantial portion of the region’s housing supply, and historically this age group moves far less frequently than younger homeowners.
Financial factors are a major reason. Many long time homeowners either have no mortgage at all or have very low mortgage payments after refinancing during the low rate period of the past decade. Nationally about forty percent of homes are owned free and clear, and among older homeowners that percentage is much higher. When a homeowner has little or no mortgage payment, there is often very little financial motivation to sell and move.
In fact, selling can actually create a financial penalty. A homeowner who bought a house twenty or thirty years ago may have a very small mortgage payment or none at all. If that homeowner sells and buys another property today, the replacement home is likely to be more expensive and financed at a higher interest rate. What used to be called downsizing often does not reduce housing costs the way it once did.
Another factor slowing turnover is the length of time people now stay in their homes. National housing data shows that homeowners now remain in their homes an average of about eight and a half years, the longest tenure recorded in decades. Missouri reflects the same pattern, with homeowners staying more than seven years on average before selling. Longer tenure naturally means fewer homes coming onto the market each year.
Reverse mortgages are sometimes mentioned as another reason older homeowners remain in their homes longer, but the data suggests they play only a small role. Based on HUD reverse mortgage data and Census homeowner estimates, roughly one to two percent of senior homeowners in the St. Louis metro area have a reverse mortgage. That means the overwhelming majority of older homeowners staying put are doing so for other financial or personal reasons.
Even when homes eventually change hands, the process can take time. Properties may spend months in probate after the owner dies, and in many cases heirs decide to keep the home as a rental rather than selling it. That trend alone removes additional homes from the owner occupied housing supply.
The result is a kind of hidden inventory problem. There are plenty of homes in St. Louis neighborhoods that could theoretically come onto the market, but many are tied up by aging in place, mortgage free ownership, inheritance decisions, and longer homeowner tenure. The homes exist, but they are not turning over at the pace they once did.
For buyers, this helps explain why inventory remains tight even though the region is not experiencing rapid population growth. Fewer homeowners are moving each year, which means fewer homes available for the next generation of buyers.
Eventually demographic forces will shift and more of these homes will reach the market. For now, however, the combination of aging homeowners, financial incentives to stay put, and slower housing turnover continues to keep a significant portion of the St. Louis housing supply effectively off the market.
