Most Baby Boomers Opting to Stay in Their Current Location Lessens Housing Availability for Rest

As they age, a large number of Americans would rather remain in their current location. This indicates that people wish to remain in their current residences rather than relocate. However, what does this imply for the available dwellings, particularly in cases where there weren't enough in the first place? People over 60 were questioned about their home goals in a recent Redfin poll. They discovered that the majority (78%) prefer to age in place. A small percentage (9%) may seek assisted living or nursing facilities while 16% may contemplate relocating to an adult community. The survey suggests that this choice could be turning the housing issue in the U.S. even worse.

Baby boomers are not selling homes

For a variety of reasons, many baby boomers are not considering selling their houses anytime soon. While over 21% believe that home prices are too expensive to consider selling, about 27% stated that they have paid off most or all of their mortgage. Purchasing a home was far less expensive in 1970 with a median cost of about $23,900. That is far less than the median price of a home in late 2023, which was $417,700, even after accounting for inflation. Therefore, selling may not be a wise financial decision for people who have already paid off their homes. They might be concerned about inflation and rising mortgage rates even if they want to downsize. The average 30-year fixed mortgage currently has a rate over 7% due to recent increases in mortgage rates. This could affect their retirement plans, as higher mortgage rates might eat their retirement savings.

Emotional attachment and social considerations

Many baby boomers who opt to remain in their houses do so for reasons other than financial gain. Over half (51%) say they are happy where they live and don't see any cause to move. Change may be unsettling, particularly, if your house is filled with memories. Seniors may be too committed to their house and locale to move even if they have an empty nest in a house that is too big. The social component of living in a retirement community may appeal to them but the cost can be prohibitive. Depending on where you reside, independent living communities might cost anywhere from $1,500 to $4,000 per month, per AssistedLiving.org. Even more costly, with monthly costs ranging from $3,500 to $10,500, are assisted living facilities. For those planning a retirement that could last 30 years or more, these costs might not be manageable.

Impact on housing market dynamics

There are benefits to aging in place, particularly in light of the present staffing crisis in senior care facilities. But it's also making the housing crisis in the United States worse. Housing is becoming unaffordable because there are just not enough houses to fulfill the demand. As per Harvard's 2023 State of the Nation's Housing report, the quantity of houses available for purchase remained at all-time lows at the beginning of 2023. According to a Redfin report, only 14% of large homes (three bedrooms or more) are owned by millennials with children compared to 28% by baby boomers who are empty nesters. Just 0.3% of these spacious residences are owned by members of Generation Z who have children.

Ten years ago, this was not the case. According to Redfin, large homes were owned by both empty nesters and young families in those days. According to Realtor.com, there is an increasing scarcity of newly constructed homes in American areas as a result of over a decade of inadequate home building. The number of single-family dwellings developed and the number of families formed fell short by 7.2 million between 2012 and 2023.

Addressing the housing challenge

If baby boomers are looking for safe, convenient, and reasonably priced accommodation, they may not have many other options but to move in with friends or relatives. Senior housing could be incorporated into efforts to develop more inexpensive homes in the United States, which is being called for. For younger generations, this may mean larger family dwellings. Redfin's chief economist, Daryl Fairweather noted that many renters and homeowners may eventually need to relocate to an area that accommodates their aging requirements, such as a single-story home in an accessible neighborhood or a senior living complex. However, the government isn't putting much effort into developing housing for the elderly, which is encouraging older Americans to remain in their current locations and exacerbating the housing problem. Fairweather suggests that politicians should prioritize expanding housing options that meet the needs of older Americans, which could improve affordability and availability for everyone.