Summary of "Can Empty-Nesters Boost Housing Affordability?"
The Indicator from Planet Money, Hosted by Darian Woods and Waylon Wong
Release Date: December 19, 2024

Introduction: Understanding the Silver Tsunami

In the episode titled "Can Empty-Nesters Boost Housing Affordability?", hosts Darian Woods and Waylon Wong delve into the concept of the Silver Tsunami, a term that has gained traction over the past few decades. This term refers to the aging population in the United States, particularly the baby boomer generation. While intended to describe demographic shifts, some critics argue that the term is derogatory, likening older individuals to a natural disaster. Darian acknowledges this perspective, stating, "That's not what we meant." (00:35)

The Silver Tsunami and Housing Affordability

The primary focus of the episode is the hypothesis that the Silver Tsunami could act as a silver bullet for the nation's housing affordability crisis. The theory posits that as empty-nesters—households where the adults are over 55, live without children, and occupy larger homes—downsize or sell their properties, the increased housing supply would drive down home prices, making housing more affordable.

Darian highlights this by explaining, "There is a theory that a wave of empty nesters putting their homes on the market will boost supply and bring home prices down." (00:47)

Expert Insight: Orfe Divangi's Analysis

To evaluate this hypothesis, the hosts consult Orfe Divangi, a senior economist at Zillow. Orfeh provides a nuanced perspective, suggesting that the Silver Tsunami might not significantly impact housing affordability as initially thought.

Current Landscape of Empty Nesters: Orfeh points out that as of 2022, approximately 16% of U.S. households are considered empty nests. These households typically have at least two extra bedrooms and have resided in their homes for over a decade. Interestingly, this number is more than double the number of families currently in need of housing. (03:55)

Geographical Mismatch: One of the critical insights Orfeh provides is the geographical mismatch between where empty nesters reside and the areas most in need of increased housing supply. He explains, "Most of these empty nest households are located in places that are relatively more affordable already and away from the coast where people are kind of flocking for higher paying jobs and more opportunities." (04:18)

Cities like Pittsburgh, Buffalo, Cleveland, St. Louis, and Detroit have a high concentration of empty nesters (over 20% in places like Pittsburgh). However, these cities are already among the most affordable in the country, with more than half of the homes listed being affordable. In contrast, San Jose, Denver, and Portland, which face significant affordability challenges, attract younger populations seeking lucrative job opportunities, particularly in the tech and financial sectors. This divergence means that even if empty nesters downsize, their homes may not alleviate the housing shortages in the most impacted areas. (04:07 - 05:05)

Reluctance to Move: Orfeh also highlights that many older homeowners may prefer to stay put. Referencing a survey by Fannie Mae, he notes, "More than half the group said they will never sell their homes." (05:29) Reasons include having low or paid-off mortgages, making relocation financially unattractive due to current high mortgage rates (over 6%), especially for retirees on fixed incomes.

Potential Downsides of the Silver Tsunami

Even in cases where empty nesters do choose to sell, Orfeh cautions about unintended consequences:

1. Relocation to Expensive Areas: Empty nesters might relocate to desirable, high-cost areas closer to their grandchildren, potentially increasing demand and prices in those regions. (06:45)

2. Limited Impact on High-Demand Markets: Since many affordable-empty nest regions are not the hotspot areas with high housing demand, the influx of homes might not effectively target the areas most in need. (07:00)

Alternative Solutions: Building More and Denser Housing

Given the limitations of the Silver Tsunami as a solution, Orfeh advocates for increasing housing supply through construction, particularly in high-demand coastal regions. This approach involves:

• Building More Housing Units: Addressing the overall shortage by creating additional homes.

• Promoting Denser Housing: Encouraging the development of multi-family units to optimize space utilization.

• Regulatory Reforms: Modifying local regulations that hinder housing development, such as minimum lot sizes and parking requirements. Orfeh remarks, "Getting rid of things like minimum lot size requirements, minimum parking requirements are just, you know, two examples of things that we could really do without." (07:17)

Counterexamples and Local Initiatives

While the broader trend suggests limited impact from empty nesters, there are local initiatives aiming to make affordable cities more attractive to younger populations:

• Pittsburgh's Retention Efforts: A business group in Pittsburgh has initiated programs offering professional networking and social events to retain its 40,000+ college graduates, of which only about half remain in the city after graduating. (07:44)

• Community Building Through Groups: Informal groups like "Pittsburgh Girls Who Walk" facilitate community engagement and help newcomers acclimate. Margot Kimball, the group's founder, shares, "I've even had people come to walks where they're kind of testing Pittsburgh out before making a big move." (08:09)

• Personal Success Stories: Members like Jessie Roos illustrate the positive impact of these initiatives. After returning to Pittsburgh, she found a supportive community through walking groups, helping her build friendships and integrate into the city. Jessie notes, "We walked along the Riverfront Trail, and it just was such a good community." (09:03)

These efforts demonstrate that community engagement and targeted programs can make affordable cities more appealing, potentially attracting younger residents and mitigating some housing affordability issues.

Conclusion: Rethinking Housing Affordability Solutions

The episode concludes that while the Silver Tsunami presents an intriguing idea, it is not a panacea for the housing affordability crisis. Effective solutions require:

• Strategic Housing Development: Building and denser housing in high-demand areas to directly address shortages.

• Regulatory Changes: Streamlining housing development processes by eliminating obstructive regulations.

• Community Engagement: Encouraging young professionals to remain in or move to affordable cities through targeted initiatives and community-building efforts.

As Orfeh succinctly puts it, the path forward lies in building more and building smarter, rather than relying solely on demographic shifts.

Notable Quotes with Timestamps

• Waylon Wong (00:14): "So there is this term that's been floating around for a couple of decades now, the Silver Tsunami."

• Orfe Divangi (03:19): "Older individuals are expected to either downsize, right? Or when they move on and pass the home onto their kids... maybe affordability could improve."

• Orfe Divangi (04:33): "I think most people prefer to be in New York, Seattle, Los Angeles, San Diego, San Jose, especially young workers in search of the highest paying jobs."

• Orfe Divangi (07:17): "Getting rid of things like minimum lot size requirements, minimum parking requirements are just, you know, two examples of things that we could really do without."

• Jessie Roos (09:03): "We walked along the Riverfront Trail, and it just was such a good community."

Timestamps

• Introduction to Silver Tsunami: 00:11
• Empty Nesters and Housing Supply Theory: 00:47
• Empty Nesters Demographics: 03:55
• Geographical Mismatch in Housing Markets: 04:07
• Reluctance of Empty Nesters to Move: 05:29
• Potential Negative Impacts of Silver Tsunami: 06:45
• Solutions Beyond Silver Tsunami: 07:17
• Local Initiatives in Pittsburgh: 07:44 - 09:13
• Conclusion and Final Thoughts: 09:38

Produced by Corey Bridges with engineering by Neil Tevold. Fact-checked by Cierra Juarez. Katkin Cannon is the show's editor.

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