Shocking: How Millions of Retirees Are Fueling the US Housing Crisis

While the idea of aging in place is gaining traction as a response to isolation and excessive consumption culture, the fact is that many retirees may have little choice but to stay in a residence that does not satisfy their requirements. The issue appears to be twofold: purchasing a house is very expensive due to high interest rates and a lack of inventory, but the flip side of that coin is that most baby boomers own a large portion of the market, with their properties being large and unaffordable for the young families they were designed to serve.

According to a recent Redfin poll, 78% of baby boomers plan to stay in their existing houses throughout retirement. Furthermore, according to Redfin research from 2022, empty-nest boomers inhabit 28.2% of all “large homes” with three or more bedrooms. In contrast, millennials, who are more likely to have children at home, own just 14.2% of such residences.

Seniors downsizing and freeing up family homes is a thing of the past in many regions, owing primarily to cost, and the implications are only now being noticed. A New York City real estate broker, Alexandra Gupta told Newsweek that “Baby Boomers are increasingly choosing to ‘age in place,’ which means staying in their homes longer rather than selling to downsize or relocate.” This practice contributes directly to the housing scarcity, as millions of properties that might otherwise be offered to younger buyers remain.

Why are retirees not moving?

Ralph DiBugnara, founder and president of Home Qualified, sums up the issue. “The most significant problem facing homeowners today is that they are equity rich, cash poor, and have fewer alternatives for fixing it due to high loan rates and home prices. Baby Boomers want to move or downsize but cannot due to a dearth of available homes, which has driven up costs. This, combined with the expensive cost of a new home owing to rising loan rates and insurance prices, keeps them stuck in homes with equity. This is also a significant contributing cause to the market’s inventory shortfall.

The effects of this trend are accurate and felt by many, as Gupta explains. Many Boomers have significant home equity, which has enabled them to use their property to build wealth or ensure retirement. Younger generations may struggle to accumulate similar wealth through homeownership. As real estate becomes increasingly out of reach for younger buyers, the wealth gap between Boomers and the following generations may increase, with homeownership becoming an even more critical driver of financial inequality. As more Boomers age in place or choose to downsize into more accessible housing options, the rental market may see an increase in demand for senior-friendly properties.

So, what are some solutions?

It will not be easy and will require a coordinated effort. Still, Jesse Saginor, associate professor of real estate development at the University of Maryland School of Architecture, Planning, and Preservation, suggests a few alternatives. “One option is to greatly boost financing, subsidies, tax credits, and/or zoning flexibility to allow for the construction of affordable senior housing so that seniors, many of whom rely only on Social Security, have somewhere to live. As a result, that approach focuses on providing elders with affordable and, if willing to relocate, reachable homes. It eliminates the monetary barrier to shifting to home for those with fixed incomes.”