Baby boomers are seeking a simpler life and an easier to take care of home. However, this means moving into a lower priced housing market traditionally sought by young families. In an already fiercely competitive market, this makes home buying difficult for everyone—boomers, and younger buyers alike.
Homes up to 1,400 square feet are in short supply, causing the lowest number of options in almost 50 years. As boomers downsize and first-time homebuyers compete for these smaller homes, such residences are tougher to find.
Most real-estate transactions in 2020 were considered downsizing by people 55 and older, adding to the housing shortage. But they are only looking to reduce their home’s footage by 100- to 200-square feet, which puts them in direct competition with first-time buyers.
The typical housing cycle has been interrupted in recent years. The days in which families see their kids off to school, the number of people in the home shrink, and houses turned over to young families, has changed. There are also a lot of boomers that are just not moving, so those homes are not available to Gen X-ers.
In a 2018 survey of 2,287 adults from the AARP shows seniors would prefer to stay in the communities where they already live, or “age in place.”
“They like their grocery store, they like their doctor, they like their local options,” said Karan Kaul, senior research associate at the Urban Institute.
If they do decide to move to a smaller, less-expensive home, boomers find themselves on a collision course with first-time buyers, who are looking for a starter home. These smaller properties have seen the greatest price growth because these two groups of people are all searching for their next house from the same small pool of choices.
Older buyers who haven’t paid off their mortgage may find they can’t buy a smaller house for less and could end up with a higher house payment than they had. This phenomenon has seen the number of older homeowners with debt increase on average from 33.2% in 2007, to 55.4% in 2019, primarily driven by mortgage debt.
One advantage for buyers right now is interest rates are still low. This can offset higher asking prices. Talking with a Destination Maui Realty agent could put you in the home you need as you age, or grow your family, with as little debt as possible. Drop us a line HERE and let us know how we can help.