US Housing Market Faces ‘Big Demographic Shift’

By Giulia Carbonaro

Senior Housing Reporter

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The U.S. housing market is "about to get hit by a big demographic shift," according to real estate analyst Nick Gerli, as the number of deaths in the country is expecting to exceed the number of births by 2033.

This gloomy prediction comes from a report released earlier this year by the Congressional Budget Office (CBO), which also said that the U.S. population growth rate is expected to wane over the next three decades, increasing by 0.2 percent compared to the 0.9 percent reported from 1975 to 2024.

Newsweek contacted Gerli for comment by email on Monday, outside of standard working hours.

Why It Matters

For decades, the country has faced a chronic shortage of homes, with inventory unable to keep up with relatively steady and even growing demand from buyers. Younger generations have especially struggled to step on the property ladder, unable to prevail in bidding wars with older, wealthier buyers and even to save enough to put down the money necessary for a down payment due to rising housing costs.

Experts believe that the current challenges to homeownership—which include higher home prices, mortgage rates, property taxes, and home insurance premiums—are forcing many Americans to delay having their own families, exacerbating the issue of falling birth rates.

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What To Know

For Gerli, founder and CEO of the real estate analytics platform Reventure App, this demographic shift could deeply upset the U.S. housing market, leading to a permanent shrinking in demand and an increase in available inventory.

According to Gerli, more deaths than births in the U.S. by 2032-33 will lead to "structurally lower homebuyer demand, as declining births and family formation lowers the need and urgency for young people to buy houses." Meanwhile, there will be more inventory on the market, "as incrementally more deaths and the aging out of the Baby Boomer generation increases listings," Gerli wrote on X.

Freddie Mac estimates that, by 2035, there will be roughly 9 million fewer Baby Boomer homeowner households in the country—a drop that will lead to a significant increase in inventory in the U.S. market.

"This will likely have a disinflationary and/or deflationary impact on home prices over the long-term," Gerli said, essentially making home-buying cheaper across the country.

The impact of this demographic shift, Gerli said, will be felt in every state from California to Florida, no matter how strong their population growth currently is. But some areas will "feel the pain sooner," he said. Florida, for example, is already facing an organic contraction, with 4 percent fewer births, he reported.

Fewer children in the country will also lead to a change in the type of housing Americans will be seeking, Gerli said.

"The reason is: one of the main relative advantages conferred by buying a house, compared to renting, is the space and stability it provides for raising a family.

So if there’s fewer people raising a family, or looking to raise a family, there will be less demand for the 4/5 bedroom house that’s 3,000 SF [square feet]. And thus lower demand to purchase," he said.

On the other hand, there could be an increase in demand for smaller homes to buy. "In general, McMansion-style neighborhoods probably won't fare as well based on the current trends in demographics," Gerli said.

What People Are Saying

Gerli wrote on X about the incoming demographic shift: "Many participants in the housing market are ignoring this issue, as if it does not provide a positive outlook for home prices, and it's also still another 6-7 years off. However, serious homebuyers and investors should dig in and understand how the demographic decline will impact their area."

The CBO’s report published earlier this year said: "In CBO’s projections, the rate of population growth generally slows over the next 30 years, from an average of 0.4 percent a year between 2025 and 2035 to an average of 0.1 percent a year between 2036 and 2055. Net immigration becomes an increasingly important source of population growth.

"Without immigration, the population would shrink beginning in 2033, in part because fertility rates are projected to remain too low for a generation to replace itself."

What Happens Next

With the American population aging, the U.S. demographic future will depend in part on immigration from outside the country. The CBO report states that net immigration will likely account for the U.S. population growth from 2033 to 2055.

Gerli admitted that "things could shift" over the coming decades, and that the country’s demographic sunset is not a given.

"Note that in the 1940s and 50s in the U.S., a massive baby boom occurred, where the fertility rate soared by 56 percent over two decades," he wrote on X.

"Some of that was a return to normal after the Great Depression. Some of it was societal. Perhaps something like that could happen again? We don’t know for sure," he said. "However, the current trends suggest a continuation of the slowdown in births."

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