USA Today recently reported on a new housing trend that has been gaining attention. It includes a growing number of older Americans in the baby boomer generation that are deciding not to downsize their homes as they near the age of retirement, as has been typical in the past. Instead, many are choosing to stay put in the homes where they raised their children. This reluctance to downsize is also contributing to the housing shortage around the country. Why are boomers choosing to remain in their sprawling abodes long after their offspring leave the nest to start lives of their own? Several factors come in to play, however, it appears that baby boomers are choosing to resist the traditional confines of what it means to advance in age just as they defied other establishment norms back in the 1960’s and 1970’s.
Other practical reasons have much to do with the decision to put off downsizing for many older Americans as well:
- Many boomers are putting off retirement. Labor Department figures show that approximately 20% of Americans ages 65 and up are working or seeking employment, which is up over 12% from 1996.
- Many have millennial children living with them well into adulthood, making the extra space a necessity. Statistics have shown that over the last decade, it has taken millennials longer than prior generations to launch their careers. According to Census figures, the percentage of senior households that have younger generations living with them rose 2% higher in 2016 from 14.4% in 2005.
- Many older people are staying in the workforce longer because they are healthier and will need bigger retirement nest eggs to finance longer retirements, according to the AARP Public Policy Institute. This is in part due to a large number of people that lost or had to tap into a signifiant portion of their savings during the economic downturn a decade ago.
- Sky-rocketing home prices, rising mortgage rates, and inventory shortages at the lower end of the market have the potential to create a new housing crisis for baby boomers. There is a serious shortage of less expensive, smaller homes in the country right now, which has resulted in an increase in prices for homes in this tier, making the tradeoff less attractive to those who are open to downsizing.
- Many boomers who held off on renovating during and after the housing crash are now focused on making and enjoying those upgrades rather than downsizing.
- Many want to enjoy bigger properties that they could not afford earlier in life that also offer more room for visiting family members.
- For some, selling can result in a large capital gain which may negate the benefit of a downsize.
- Many boomers have finally paid off their mortgages and don’t want to start making housing payments again.
Lastly, 54% of those surveyed by Merrill Lynch said that they don’t plan on downsizing because they feel comfortable in the house where they raised their children. Many feel that their current house has always been and for now, will continue to be “home”.