When you're thinking about buying or selling San Francisco real estate, you might focus on mortgage rates, inventory levels, or seasonal trends. But there's a bigger force at work: Demographics.
Housing economics, like all economics, comes down to supply and demand. The biggest driver of that equation is the age and life stage of the people who live here.
Right now, we're experiencing a massive demographic shift that's reshaping the SF housing market in ways that will impact buyers, sellers, and SF Realtors for decades to come. It's called the Silver Tsunami.
Millennials have aged into their prime homebuying years, creating enormous demand. At the same time, Baby Boomers are living longer and staying in their homes longer than previous generations.
After mortgage rates shot up in 2022, something interesting happened. Millennials and first-time buyers found affordability even more challenging. Meanwhile, Baby Boomers, who are more likely to have significant savings and existing home equity, became less impacted by those higher rates. As a result, Boomers have retaken the top spot as the largest share of homebuyers. The National Association of Realtors found that a full half of older boomers and 40% of younger boomers are purchasing homes entirely with cash.
But Millennials remain the largest generation in the US by population. That demand hasn't disappeared. For some, it's just gone dormant.
(P.S. To the Gen X readers, we didn't forget you! However, being aged between the early home-buying and later home-selling years, your group is not quite as central to the current demographic transition.)
A recent episode of the KQED Forum podcast explored this demographic shift in depth, documenting just how dramatically the Bay Area is aging. You can listen to the full discussion here: The Bay Area is Getting Older—Fast. Are We Ready? | KQED.
The numbers are striking. The San Francisco Bay Area has become the third oldest region in the U.S., trailing only two areas in Florida. The median age in our region is almost 41, making it the #1 oldest among the top 20 US metros.
Looking ahead, the trend only accelerates. Right now, 20% of the Bay Area population is elderly. By 2060, that number jumps to over 30%. This is a fundamental shift in who lives here and what they need from housing.
As demographics shift, many Baby Boomers face a complex decision about whether to downsize, move to assisted living, or stay put. But "aging in place" isn't always by choice. As one expert on the podcast noted, there's a darker side - being "stuck in place".
For example, a rent-controlled walk-up on a San Francisco hill that worked perfectly in your 30s might leave you isolated and homebound in your 70s and 80s. The housing that once provided independence can become a barrier to the care and connection seniors need.
The podcast guest noted that about 25% of unhoused individuals are older adults, and it's the fastest-growing segment. Many seniors in rent-controlled buildings face displacement as landlords struggle to maintain aging properties, creating both health issues and anxiety within our elder community.
Even when older residents do move or pass away, younger families often can't afford to replace them. With a median home price around $1.4 million, you need an annual income over $320,000 to afford the typical Bay Area home. That's not the reality for many young families, so some are leaving the Bay Area entirely.
Despite these challenges, San Francisco real estate benefits from some real advantages for an aging population.
These aspects make San Francisco housing more valuable for aging residents.
As housing affordability remains challenging, we're seeing more multigenerational home purchases, with Generation X leading this trend. Families are pooling resources to make San Francisco real estate work for multiple generations. We recently wrote about this in another post, Should You Buy San Francisco Property With Friends?
Rather than just building more units, housing experts emphasize the need for affordable, intergenerational, family housing that creates "development without displacement", one podcast guest notes. The goal isn't warehousing seniors but keeping them connected to the communities they helped build.
Some families are starting conversations about aging before a crisis hits. This can include viewing aging as a workforce opportunity and considering it as part of childcare strategy, especially for the "sandwich generation" (currently Gen X and some Millennials too) managing both childcare and elder care costs.
If you're a Baby Boomer considering your next move, you do have options. You might downsize within San Francisco, move to a lower cost-of-living area, or modify your current home for aging in place.
We have written about these topics using examples in the Noe Valley neighborhood but relevant to all of SF. Click below for further reading:
If you're buying a home in SF, following these demographic trends can help you make better personal decisions around San Francisco neighborhoods, property types, and timing. Areas with good transit access and community amenities may become increasingly valuable in the future.
Families can also consider multigenerational housing strategies. Co-buying with family members is not only more affordable but can create support systems that work across generations.
Demographics drive San Francisco real estate in significant ways. The Silver Tsunami is not a hypothetical but happening as we speak. These trends can help us make better decisions about buying and selling homes in San Francisco.
The key is starting the conversation early, about your own family's housing strategy, as well as how we can advocate and legislate to overcome the challenges that these changes present. Because in real estate, as in life, the biggest changes are often the ones you can see coming.
Want to learn more about neighborhoods around SF? Here are a few we think you’ll love.
Looking for a trusted team to help you buy and/or sell a home in San Francisco? Reach out to us today. We'd love to help.
