Today’s show is a continuation on the topic of demographics. Yesterday, we talked about the reduction in mobility that has taken place over the past decade. The least mobile group of people are those above 65 years of age. The move less frequently than any other group. But eventually they move, usually because they have to. Either due to health or because they die, one way or another, they will eventually move.

A number of communities have been built around the country specializing in retirees as the target client. When Sun City, a suburb of Phoenix Arizona opened on January 1, 1960, it was billed as the original retirement community. It was the first of its kind in America.

On the weekend Sun City opened, cars were backed up for 2 miles as some 100,000 visitors waited to gawk at a village built specifically for adults over the age of 50.

But the same demographics that propelled Sun City’s rise now pose an existential risk to this suburb as baby boomers age. More than a third of Sun City’s homes are expected to turn over by 2027 as seniors die, move in with their children or migrate to assisted living facilities.

The big question looming in this neighborhood—and dozens of others like it around the country—is what happens to everything from home prices and to the local economy when so many homes post ‘For Sale’ signs around the same time?

The very same tidal wave of people expected to enter senior housing, whether it’s independent living, assisted living, or skilled nursing means that same wave of folks are exiting their homes.

This second but related tidal wave of homes will be hitting the market on the scale of the housing bubble in the mid-2000s. This time it won’t be driven by overbuilding, easy credit or irrational exuberance, but by an inevitable fact of life: the passing of the baby boomer generation.

It’s estimated that one in eight owner-occupied homes in the U.S., or roughly nine million residences, are set to hit the market over the next 10 years as the baby boomers start to die in larger numbers. That is up from roughly 7 million homes in the prior decade.

By 2037, one quarter of the U.S. for-sale housing stock, or roughly 21 million homes will be vacated by seniors. That is more than twice the number of new properties built during a 10-year period that spanned the last housing bubble.

Most of these excess homes will be concentrated in traditional retirement communities in Arizona and Florida or parts of the Rust Belt that have been losing population for decades. A more modest infusion of new housing is expected in pricey coastal regions of New York or San Francisco where younger Americans are still flocking in large numbers.

The Gen Xers, as a generation are a smaller in numbers than the boomer generation and more financially precarious. They have different preferences, posing a new kind of test for the housing market. They don’t necessarily want to live in the same types of homes that their parents did.

One problem is that the bulk of the supply won’t necessarily be in places where these new buyers want to live. Gen Xers and the younger millennials have shown thus far they would rather be in cities or suburbs in major metropolitan areas that offer strong Wi-Fi and plenty of shops and restaurants within walking distance

In case you think I’m being overly alarmist, you just need to look to Japan to see the impact of demographics on the housing market. With the aging population, Japan now has 11 million vacant apartments across the nation. This was in a place where real estate was once in such demand that people were signing multi-generational loans in order to afford the property.

As you make investments, you definitely want to look at demographics in your local market and fast forward a few years to make sure you’re going be in a good spot when the elderly exit the market.