Older Americans who own their homes are staying there largely because it’s cheaper than other options. The trend is contributing to the housing shortage.

SEATTLE — More than three-quarters (78%) of older homeowners plan to stay in their current homes as they age mainly because there’s not much financial incentive to sell and move, according to new research by the real estate brokerage firm Redfin.

Most (54%) of baby boomers who own homes have no mortgage. Those who do have mortgages have much lower interest rates than they would if they sold and bought a new home, Redfin found. And with medical and tech advances, it’s increasingly easier for people to stay in their homes as they age.

Redfin research found only one in five (20%) of baby boomers are considering moving into a 55+ community or have already done so. Another 10% plan on moving in with adult children or into an assisted-living facility (10%). Others plan on moving in with friends (6%).

The nationally representative survey was fielded to roughly 3,000 U.S. homeowners and renters. The results from baby boomers who rent their home are similar to the results for homeowners noted in Redfin’s report.

“Older Americans are aging in place because it makes financial sense, but also because it’s human nature to avoid thinking about challenging scenarios such as needing help as you get older,” said Redfin Chief Economist Daryl Fairweather. “In reality, many homeowners and renters will need to move somewhere that better meets their needs as they age, like a senior-living community or a one-story home in an accessible neighborhood. But the government isn’t prioritizing building housing for seniors, which is further encouraging older Americans to stay put, exacerbating the inventory shortage.”

Aging in place is already contributing to the housing shortage, and is likely to continue doing so, Redfin found. Inventory is sitting at historically low levels (though new listings have started climbing in recent months). Homeowners who scored ultra-low mortgage rates during the pandemic are staying put to avoid taking on a new rate at today’s levels. Many of those homeowners are baby boomers.

Redfin said the aging-in-place trend is one reason young Americans are having a hard time finding a family home. Empty-nest baby boomers own 28% of three-bedroom-plus U.S. homes, while millennials with kids own just 14%. Baby boomers have an outsized impact on the housing market because they’re most likely to own homes: Nearly 80% of boomers own the home they live in, compared to 55% of millennials.

Another Redfin analysis found that older Americans staying in their homes is already a driving force behind increasing homeowner tenure and the lack of homes for sale: More than half of baby boomers have lived in their home for over 10 years. A low inventory has pushed home prices up and exacerbated the housing affordability problem in the country, Redfin said.

More than half (51%) of baby boomers who aren’t planning to sell their home anytime soon say it’s because they like their home and have no reason to move, Redfin found. More than a quarter (27%) say it’s because their home is completely or almost paid off, and roughly one in five (21%) are staying put because home prices are now too high.

© 2024 Florida Realtors®