Forget an automatic migration to Florida. Many older Americans want to stay put as they age—and that could have a big impact on the housing market.
With low mortgage rates locked in, more than three-quarters of those aged 50 and older want to remain in their homes for the long haul provided they can have some remodeling done so they can better age in place, according to a recent AARP Home and Community Preferences Survey. And in a twist, that could be good news for cash-strapped, first-time homebuyers and a blow to buyers looking to trade up into nicer, larger abodes.
To come up with its findings, AARP surveyed more than 2,800 adults aged 18 and older in June and July.
“It’s a long-standing trend that people want to stay in their homes as they age, and the older population is growing,” says Rodney Harrell, vice president of family, home, and community at AARP. “Remodeling will be a growth area as we see demand for a variety of functional design changes, like wheelchair accessibility if a house has too many stairs.”
Baby boomers staying put could be a boon to cash-strapped, first-time buyers if there are fewer wealthier baby boomers putting offers on the same, smaller homes, says Ali Wolf, chief economist at Meyers Research, a housing market data firm. Boomers and millennials have historically competed for similarly sized properties, with millennials looking at entry-level pricing while boomers are looking to downsize into smaller quarters.
“The overlap proved detrimental to the younger [buyers] because they were less able to make the most competitive offer,” says Wolf. “Competition for smaller, more reasonably priced homes is unlikely to ever significantly abate, but with more older Americans deciding to stay put, some millennials may find the market easier to navigate.”
However, Gen X buyers may be hurt by this trend as fewer larger homes in more desirable neighborhoods may go up for sale, Wolf explains. These buyers may be looking at move-up homes to accommodate growing families or having their parents move in with them.
Why baby boomers want to stay where they are
The reason that 77% of respondents want to remain in their homes is because they said they value their communities and access to things like health care, safe outdoor spaces, clean water, and healthy foods. But many of those homeowners plan to remodel their homes into fully accessible forever homes, according to the survey.
A third of respondents said they would need to make changes to their homes so they could live safely and feel more comfortable. The majority, 71%, said their home has accessibility issues both inside and out.
Nearly four-fifths, 79%, said they need to modify bathrooms with grab bars or no-step showers. Safety was another priority, with 61% saying an emergency response system was needed. And almost half, 48%, said they would need a smart home device such as a voice-activated home assistant or doorbell camera.
Some seniors are choosing to age in place because they’ve locked in low financing options. More than half, 57%, are mortgage holders who had an interest rate below 4%, according to the Federal Housing Finance Agency. While rates are low now, they’re expected to continue going up. Add in record-high home prices, and it may make more financial sense for many baby boomers to stay where they are.
“It makes sense that many older adults plan on aging in their homes. Housing is a good inflation hedge, and many may feel relieved to know their monthly payment is locked in,” says Wolf.