Retirees’ Decisions Are Causing Housing Issues: Who’s Affected? Although the idea of “aging in place” appears to be gaining traction as a reaction to loneliness and the overindulgent culture of consumerism, the truth is that many retirees may be forced to remain in a home that does not suit their needs.
The issue appears to be twofold: first, buying a home is very costly due to high interest rates and a shortage of inventory; second, the majority of baby boomers own a significant share of the market, and their homes are large and out of reach for the young families they were intended to serve.
According to a recent Redfin survey, 78% of baby boomers plan to retire in their existing residences. Furthermore, according to a Redfin estimate from 2022, empty-nest boomers own 28.2% of all “large homes,” which are residences with three or more bedrooms. However, only 14.2% of such residences are owned by millennials, who are more likely to have children at home.
In many places, the days of elders downsizing and clearing out family homes are a thing of the past due to financial constraints, and the effects of this are only now becoming apparent.
“Baby Boomers are increasingly choosing to ‘age in place,’ meaning they stay in their homes longer rather than selling to downsize or relocate,” New York City real estate broker Alexandra Gupta told Newsweek. Because millions of properties that might otherwise be available to younger purchasers are still inhabited, this pattern is directly contributing to the housing crisis.
However, these residences were not always regarded as an antiquated remedy. Renovating bathrooms to enable zero entry showers and retrofitting accessible objects like elevators or ramps are costly projects that people on fixed incomes cannot readily afford. If downsizing is difficult, it is nearly impossible to do so in an accessible home since, according to a 2023 CNBC report, less than 5% of the housing stock in the United States is accessible.
Why retirees are not moving?
Home Qualified’s founder and president, Ralph DiBugnara, provides a summary of the problem. “The largest issue I observe with homeowners today is that, due to high mortgage rates and high home values, they are cash poor, equity rich, and have few alternatives for fixing their situation. At this point in their lives, baby boomers want to downsize or move, but they are unable to do so due to a shortage of available homes, which has increased costs. They are being kept in homes with equity because of this, as well as the high cost of a new house because of rising interest rates and insurance premiums. This plays a significant role in the market’s inventory shortage issue as well.
Therefore, retrofitting accessible adaptations such as ramps, larger hallways, lifts, and other mobility aids remains an option. These modifications are not only an additional price at the present, but they also appear to devalue a house for young, prospective purchasers who do not require these accommodations.
56 percent of respondents to a 2021 National Association of Home Builders survey on homebuyer attitudes stated that they would not purchase a house if it included an elevator, which is essential for wheelchair users residing in multi-story buildings. The majority of respondents thought that additional changes like large halls and step-free entrances were desirable, but they might potentially raise costs.
According to Gupta, “Boomers’ control over a large share of the housing market also has a broader economic effect,” indicating that the impact of this trend is extremely real and felt by many. A large number of Boomers have significant home equity, which enables them to secure retirement or leverage their property for wealth. However, it might be difficult for younger generations to accumulate comparable wealth through homeownership. The wealth gap between Boomers and later generations may deepen as real estate continues to be out of reach for younger buyers, with homeownership emerging as a key factor in financial inequality.
Senior-friendly housing may become more in demand in the rental market as more Boomers age in place or decide to downsize into more accessible housing options. Renting for longer periods of time may become more common among Millennials and Gen Z, who are already delaying purchase because of growing costs. As younger people put off buying homes, it may become more difficult for them to save money for down payments, which could result in higher rents, particularly in coveted urban locations.