A growing trend among retirees is “aging in place,” where older Americans remain in their current homes instead of downsizing or relocating. While this decision provides stability and comfort, it’s also a response to high housing costs, limited inventory, and inaccessible alternatives. However, this trend has ripple effects on the broader housing market, impacting younger buyers and exacerbating housing shortages.
Why Retirees Are Aging in Place
Baby boomers, who control a significant portion of the housing market, often find themselves “equity rich but cash poor.” They have substantial home equity but limited liquid assets to fund a move. High interest rates, insurance costs, and elevated home prices further deter downsizing.
Ralph DiBugnara, president of Home Qualified, explains, “Boomers want to move or downsize but are locked in due to a lack of homes for sale and the high costs associated with buying a new property.”
Lack of Accessible Housing
Another barrier is the scarcity of accessible housing. Only 5% of U.S. homes are designed to accommodate mobility challenges, according to a 2023 CNBC report. Retrofitting current homes with ramps, elevators, or wider hallways is expensive, and these modifications may reduce the property’s appeal to younger buyers.
High Costs of Moving
For retirees on fixed incomes, moving is often cost-prohibitive. The expense of purchasing a new, smaller home—let alone one with accessibility features—is frequently out of reach.
Broader Impact
Boomers’ decision to remain in their homes exacerbates the housing shortage, leaving fewer properties available for younger families.
- According to Redfin, 78% of baby boomers plan to age in place, and they occupy 28.2% of large homes with three or more bedrooms.
- In contrast, millennials, the generation most likely to have children, only account for 14.2% of these larger homes.
Economic Inequality
This trend contributes to widening wealth gaps between generations. Boomers benefit from significant home equity, often using it to secure retirement or build wealth. Meanwhile, younger generations struggle to purchase homes, delaying their ability to accumulate wealth.
Rental Market Strain
As younger buyers face affordability challenges, many turn to renting instead. This increases demand for rentals, particularly senior-friendly options, driving up rents in metropolitan areas and further complicating savings for down payments.
Possible Solutions
Addressing the challenges of aging in place and housing shortages will require systemic changes.
Affordable Senior Housing
Building affordable, accessible housing specifically for seniors could provide retirees with viable downsizing options.
- Increased funding, subsidies, and tax credits for senior housing construction could ease the financial burden of relocating.
- Zoning changes could encourage the development of senior-friendly communities.
Support for Retrofits
Expanding programs that fund or subsidize home modifications could allow seniors to age in place safely while maintaining their homes’ value for future buyers.
Building for All Segments
Jesse Saginor, a professor at the University of Maryland, emphasizes the importance of increasing housing supply across income levels and age groups. “Until we build for all segments of the population, shortages will persist,” he notes.
Path Forward
The decision to age in place reflects deeper issues in the housing market, from affordability to accessibility. While aging in place provides comfort for retirees, it highlights systemic imbalances that demand a comprehensive response. Expanding affordable housing options, addressing accessibility challenges, and increasing overall housing supply are crucial steps to easing the strain on the housing market for all generations.
FAQs
What does aging in place mean?
Aging in place means staying in your current home during retirement.
Why is downsizing difficult for retirees?
High home prices, interest rates, and moving costs make downsizing hard.
How much of U.S. housing is accessible?
Only 5% of U.S. housing is designed to be accessible.
What is the impact of aging in place on housing?
It reduces housing inventory and limits options for younger buyers.
What solutions exist for the housing shortage?
Affordable senior housing, retrofitting homes, and zoning reforms can help.
