‘It’s going to be a cat-and-mouse game’: ‘Oracle of Wall Street’ forecasts silver wave as baby boomers begin listing their homes to cash in on wealth gains. Is now the ideal time to sell?
Meredith Whitney — famously known as the "Oracle of Wall Street" for her forewarnings of a financial crisis back in 2007 — is confident that older homeowners will start listing their homes, opening up opportunities for hopeful young buyers across America.
Whitney, the CEO of investment research firm Meredith Whitney Advisory Group, points to the cost-of-living crisis and higher consumer prices, which could lead some homeowners to cash in on their equity by selling and moving into smaller homes to enjoy a more comfortable lifestyle.
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She believes this will lead to an excess of inventory, driving home prices down.
“I say all this almost as a public service announcement in terms of, if people want to sell, be better positioned to sell earlier as opposed to later,” Whitney said in a recent interview with Business Insider.
On the flipside, Whitney advises buyers to wait for prices to come down as inventory swells.
“It’s going to be a cat-and-mouse game,” she says.
Will there be a ‘silver tsunami’ aging out of the housing market?
Whitney has already foretold of a “silver tsunami” coming back in November, as millions of Americans begin to think about downsizing.
Citing AARP estimates at Yahoo Finance’s Invest Conference, Whitney said 51% of people over the age of 50 are planning to downsize to smaller homes — ushering in over 30 million units into the housing market.
She also believes many of these older folks will be unaffected by high mortgage rates, since they can use up the cash from selling their larger homes to purchase smaller properties, mortgage-free.
"I think it's rate-agnostic because older people have lower mortgages, if any mortgage at all."
Whitney believes this shift will start to take place in late 2024 into 2025, adding it’s a multi-decade cycle.
However, other experts are forecasting that this transition will stretch over a larger time period, especially as baby boomers appear to be holding onto their homes for longer.
Mark Fleming, chief economist with financial services company First American, told Fortune he expects baby boomers to take about two decades to complete the transition.
“Demographics are never a tsunami,” Fleming says. “In fact, the youngest baby boomers are only just turning 60. There's a long, long way from aging out yet.”
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What sellers need to know
Now, Whitney isn’t suggesting property prices will suddenly plunge across the U.S. within the next couple of years, but she does believe some markets will be better for buyers, while others will benefit sellers.
“I think you’re going to see a bifurcated housing market where you see continued strength in some areas and then disproportionate weakness in others,” Whitney told Business Insider, adding price changes will likely slowly unfold over the next decade.
Back in October, Whitney pointed to Connecticut, Illinois, New Jersey and Pennsylvania as examples of states where home prices could fall, especially in rural areas. But she’s now adding New York and Ohio to the list, where she’s seen demand for new home purchases declining.
On the other hand, she foresees several Sun Belt states, such as Texas, Tennessee, Florida, Utah and Arizona to see increased demand due to better job opportunities luring in younger workers.
Of course, baby boomers may be able to get a better deal now rather than later — when many experts predict older homeowners will sell en masse. However, then they must decide where they’ll be able to move in today’s housing market.
While Whitney anticipates seniors will downsize in warmer states, like Florida and Texas, these are also states dealing with a shortage of smaller, more affordable homes.
A 2023 Redfin report found the income needed to buy a “starter home” — smaller, more economical homes at cheaper prices — has also risen the most in the Sunshine State due to both retirees and out-of-town workers moving in. However, researchers did point out that despite the increases seen in Florida, these homes are still not as costly as they would be in places like Austin, Texas and Phoenix, Arizona.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
