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Housing Glut on Horizon? Aging Boomers to Flood the Market

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There are signs that the housing market is improving and a recent survey finds that more Americans are feeling confident about the real estate market. According to a March Prudential real estate survey, 60 percent of survey respondents said they are optimistic about the housing market and 70 percent said they expect home values to improve within the next two years. Nearly 63 percent of respondents believe real estate is a good investment compared to 52 percent last year. Prudential said this is the second straight year that consumer confidence in the housing market has improved.

Granger Cobb, the CEO of Emeritus Senior Living (ESC), a leading provider of assisted-living housing, said he believes the housing market has stabilized. In an interview with The Daily Ticker, Granger said baby boomers were "putting off assisted living as they saw the value of their house shrink" but more people are "coming to this new realization" that home prices are not bouncing back to pre-2008 levels anytime soon.

If Cobb is right, the housing market could see a flood of homes for sale from seniors who have finally decided to sell. A recent report by the Bipartisan Policy Center predicts 26 million homes could hit the market by 2030 from retiring baby boomers or those facing financial difficulties.

The Center said the housing market in Michigan has already become flooded with homes put up for sale by boomers. Younger generations may not be able to buy the excess inventory, thus creating a senior housing glut in many parts of the country, according to the Center's report.

Emeritus operates 478 senior living communities in 44 states. Cobb says the company was "able to weather the [housing] storm pretty well" and the occupancy rate at its communities held steady near 88 percent during the downturn.

The National Association of Realtors reported that existing home sales increased 4.3 percent in January, the third gain in the past four months. Total housing inventory in January fell 0.4 percent to 2.31 million homes available for sale. That's down from 4.4 million homes available for sale in July.

This week's housing data includes February housing starts (Tuesday); February existing home sales (Wednesday); and new home sales for February (Friday).

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