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More Boomers Selling Homes, but Who Will Buy Them?

Baby Boomers putting their house up for sale could flood the market in coming years, while the younger generations may not be interested in buying, a new report says.

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"It's already happening in some states like Michigan," says Rolf Pendall of the Urban Institute and a co-author of the report by the Bipartisan Policy Center.

"Seniors there are already putting their homes on the market and the absorption of housing is less and creating more inventory," Pendall explains. "There's hesitancy on the buyer's part."

As boomers downsize because of retirement, finances, health or death, they're expected to release some 26 million homes onto the market by 2030, according to the Policy Center paper.

The problem is that echo-boomers, or Generation Y—those born between 1982 and 1995—may not be buying up the inventory, says Pendall, whose retired mother is trying to sell a home and downsize.

"Whether it's jobs, confidence, tight credit or a slowdown in immigration, there could be a real slowdown in buying from the younger generation," Pendall explains.

The Bipartisan Policy Center's report states that young adults are struggling with higher levels of credit card and student loan debt than their elders—some of which could take decades to pay off.

Couple that with the current housing struggles and the report concludes that young people are just not in the buying mood—now or anytime soon.

"Certain areas of the country are better off than others," Pendall says. "But if we look at the Northeast and Midwest, seniors are going to be putting homes on the market and moving to warmer climates. That means more inventory to sell. Housing will depend on the echo-boomers, and it's not known what they will do."

But some analysts don't see the explosion of seniors selling homes as a hit on housing.

"It's not that big because when you look at the market, it's pretty good right now and getting better," says Walter Maloney of the National Association of Realtors (NAR).

"Besides, seniors have been selling homes for years, and overall inventories are going down. We believe there is pent-up demand," Maloney adds.

Some experts say a final verdict on any kind of senior housing glut is too hard to make right now.

"The extent to which baby boomers unload their homes is a projection at this point," says Greg McBride, senior analyst at Bankrate.com.

"I think it ignores the impact of foreign investors buying homes in the U.S.," McBride argues. "The decline of the dollar and the global expansion of the middle class is bringing in plenty of buyers."

But even as domestic and foreign investors help improve housing markets such as Miami there may not be enough of them to soak up the homes, says Pendall.

"The sheer number of retirees putting homes on the markets will be overwhelming," Pendall says. "Investors can't make up the whole difference."

The number of homes on the market has declined in the last year. Some 2.3 million are currently for sale—down from 4.4 million in July of last year, according to the NAR. It also takes a much shorter time to sell a house—24 percent of homes on the market are selling in less than three months, down from six months in early 2011.

But other numbers are going up. Since 2011, an estimated 10,000 people in the U.S. turn 65 every day, according the Bureau of Labor Statistics. That's up from 7,000 in 2010. Meanwhile, about 6,000 to 10,000 people retire each day.

Many of those seniors will vacate their current residence to move into nursing homes or be forced to sell because of financial reasons, the death of a spouse or because the house is just too big to maintain.

Admitting that it's hard to say exactly what will happen to housing in the years ahead, Pendall argues that some sort of national housing policy is needed that will help both buyers and sellers at any age.

"It's government and markets too. We need to look at the financial system, tax incentives and why credit is so hard to get these days," says Pendall. "We need to prepare for what's ahead."

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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