Forget about an automatic migration to Florida. Many older Americans want to stay put as they age, which could have a big impact on the housing market.
With low mortgage rates locked in, more than three-quarters of people aged 50 and over want to stay in their homes long-term, provided they can undergo renovations to age better in place, according to a recent AARP Home and Community Preference Survey. And in a twist, that could be good news for cash-strapped first-time homebuyers and a big blow to buyers looking to swap into nicer, larger mansions.
To reach its conclusions, AARP interviewed more than 2,800 adults aged 18 and over in June and July.
“It’s a long-standing trend that people want to stay in their homes as they get older, and the older population is growing,” says Rodney Harrell, vice president of family, home and community at AARP. “Remodeling will be an area of growth as we see demand for a variety of functional design changes, such as wheelchair accessibility if a house has too many stairs.”
Baby boomers who stay put could be a boon to cash-strapped first-time buyers if there are fewer wealthier baby boomers bidding on the same smaller homes, according to Ali Wolf, chief economist at Meyers Research, a housing market data company. Baby boomers and millennials have historically fought over properties of similar size, with millennials seeking entry-level prices while baby boomers seek to downsize in smaller neighborhoods.
“The overlap proved to be detrimental to the youngest [buyers] because they were less able to make the most competitive offer, ”says Wolf. “Competition for smaller, more reasonably priced homes is unlikely to diminish significantly, but with older Americans deciding to stay put, some millennials may find the market easier to navigate. “
However, Gen X buyers could be affected by this trend, as fewer larger homes in more desirable neighborhoods could go on sale, Wolf says. These buyers may consider moving to accommodate growing families or have their parents move in with them.
Why baby boomers want to stay where they are
The reason 77% of those surveyed want to stay in their homes is because they value their community and access to things like healthcare, safe outdoor spaces, clean water, and healthy food. But many of those homeowners plan to turn their homes into a fully accessible home forever, according to the survey.
One-third of those surveyed said they would need to make changes to their homes so that they could live safely and feel more comfortable. The majority, 71%, said their home had interior and exterior accessibility issues.
Almost four-fifths, 79%, said they needed to modify bathrooms with grab bars or step-less showers. Safety was another priority, with 61% saying an emergency response system was needed. And nearly half, 48%, said they would need a smart home device such as a voice-activated home assistant or doorbell camera.
Some seniors choose to age in place because they are stuck in low funding options. More than half, 57%, are mortgage holders who had an interest rate below 4%, according to the Federal Housing Finance Agency. Although rates are low now, they are expected to continue to rise. Add to that the record home prices, and it may make more financial sense for many Baby Boomers to stay where they are.
“It makes sense that many older people consider aging in place. Housing is a good hedge against inflation, and many may feel relieved to know that their monthly payment is blocked, ”says Wolf.