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Older home buyers shopping for a smaller home that they will find easier to maintain are struggling to find enough selection in today’s housing market. It’s making downsizing increasingly difficult.
Housing inventories for homes that are up to 1,400 square feet have fallen to a 50-year low, according to Freddie Mac, even as a growing number of young couples and aging seniors are competing for them. Price growth has been highest for smaller, less expensive homes, says Len Kiefer, deputy chief economist at Freddie Mac.
With so few homes in that category available on the market, baby boomers may have to change their expectations when downsizing.
“We have a housing shortage,” Lawrence Yun, chief economist at the National Association of REALTORS®, told The Wall Street Journal. “Clearly from the age patterns, young people want to upsize, and the older generation is looking to downsize, but not greatly—only 100 or 200 square feet smaller than where they’d been living.”
About 28% of real estate transactions in 2020 were for those looking to downsize, Yun says. Most of those transactions were for buyers aged 55 or older.
Some baby boomers are choosing to age in place and retrofit their current home so they can stay there longer.
Higher costs could mean more seniors with mortgage debts. The number of older homeowners with debt is increasing, from 33.2% in 2007 to 55.4% in 2019. Most of that increase is attributed to mortgage debt, according to the Urban Institute. Read more: Where Seniors Are Most Likely Still Paying Their Mortgage