Posted on 04/18/2024 12:31:09 PM PDT by TigerClaws
Among the many hard truths for those trying to enter America's brutal housing market, here's one: Baby boomers continue to own many of the country's large houses, even after their households have shrunk to one or two people.
Baby boomer empty nesters own twice as many of the country's three-bedroom-or-larger homes, compared with millennials with kids, according to a recent analysis from Redfin. That means those larger homes aren't hitting the market, one factor limiting the supply for the younger generations who could use those extra bedrooms.
Some baby boomers, the generation now between the ages of 60 and 78, are happy in their large homes, using the extra bedrooms for hobbies and visiting family. Others say they want to downsize, but it just doesn't make sense financially.
Some want to downsize, but the numbers don't add up
Sherry Murray, 73, and her husband, 80, bought their house in the North Hills of Pittsburgh in 1991, for $240,000. It's got four bedrooms, including some they don't use anymore. Many of her friends are in the same boat.
"What a lot of us have done is not walled off the extra bedrooms, but closed the doors, and you try not to have to maintain them," she says. "It's just too much house at this point."
The house is paid off, and Murray has wanted to downsize for a while, but she says homes that fit what she's looking for – 2,000 square feet, all on one level, in the same suburban area – sell quickly and for a lot of money.
So they've stayed put.
"You don't want to be economically stupid. If my house is worth even $650,000, I don't want to spend $1.1 million to downsize substantially, knowing that on top of that, I'm probably going to have to pay some [homeowner association] fees," she says.
Smaller homes can cost more if they're newer, or are part of a community that provides extra services. Some metro areas have few one-story homes, making them hot commodities.
Some homeowners are also affected by what's known as the mortgage lock-in effect. While 54% of baby boomer homeowners own their homes free and clear, according to Redfin, most of those with mortgages have low rates. So it doesn't make much sense to take out a new mortgage, with rates now around 7%.
"It just is a dumb economic decision to spend that much extra money for getting so much less," Murray says.
Across the country, many baby boomers are facing their own version of this calculus: It can be cheaper — and more appealing — to stay in their current, large house, than to sell it and move to something smaller.
This doesn't only affect younger buyers.
"You've got a pure housing mismatch for older homeowners. They are mismatched physically or functionally with the house that they're in," says Gary Engelhardt, an economist at Syracuse University who studies aging and housing markets. "That's because it's multifloor living. It's stairs. It's also other upkeep."
Engelhardt says that's a serious concern because it can can lead to things like falls. "And falls can be very devastating, could have very devastating health consequences, especially for the oldest old," he says. "In general, we would like to have older homeowners ... matched with their housing in a much better way than we currently have."
So what could be done?
Engelhardt says there are basically two policy approaches to deal with what's happening.
First, he says, is to provide subsidies or tax credits for home modifications that allow older adults to age in the homes they have. While that could make seniors' current housing safer, it doesn't put those houses back into the market.
Second, encourage building housing that's well suited to older Americans, Engelhardt says: "You promote the construction of new residential units that are going to be ADA compliant, that are going to have universal design and all the types of features that lend themselves to a better match of functionality at older ages."
For instance, the government could create a tax credit to encourage developers to build accessible housing, akin to the Low Income Housing Tax Credit that incentivizes building affordable housing.
Jenny Schuetz, a housing policy expert at the Brookings Institution, says in trying to incentivize older adults to move out of homes that are now too large for them, different tools are needed depending on their geography and financial resources. For instance, a lower-income homeowner of a deteriorating row house might be willing to a swap for a newer, smaller apartment in an elevator building, if there was a program for that.
But longtime California homeowners who've seen their property values skyrocket would likely require a different approach, Schuetz says. There, Proposition 13 strictly limits increases in property taxes – so that many longtime homeowners pay taxes on a small fraction of their home's value. That created its own lock-in effect, though a recent rule change allows those over age 55 to keep their lower tax rate if they buy and move into a home of equal or lesser value.
Building more housing that's attractive to seniors
There are other policy changes that could make it easier to build housing for different life stages and thereby entice boomers to downsize.
"I think one of the things that we know to be true is that older adults want to be able to age in their communities," says Danielle Arigoni, managing director for Policy and Solutions at National Housing Trust. That's where they already have friends and neighbors, doctors and bus routes they know — familiarity that makes aging in their community possible.
1. If a couple is sitting on a $1 million capital gain on a home they purchased years ago for $250,000 then they will lose half the $500,000 exemption if one of them dies before it’s sold.
2. They’re probably in the lowest tax bracket they’ve ever been in, so their capital gains tax rate is likely to be very low (maybe 0%?).
Uh, try downsizing to an apartment.
Plenty of over 65 communities with nice apartments.
Sell at 650,000 and get a nice 3,000 a month apartment. Could cover the rent for over 15 years.
Nice pic. From Dr. Zhivago?
More effing lies from the corrupt running government.
The bottom line is the government have made it nearly impossible for young people to afford even 60+ year old homes, even with 2 incomes. They have devalued the dollar and it’s worth less and less as they spent trillions on other countries, foreign aid, globalist war adventures etc.
Then the corrupt running government then opened the border up so millions can enter illegally, creating even more competition and even bigger housing issues.
The corrupt running government f***** up the economy and our country so bad, the results are glaring. And now they’re trying to lay the blame on baby boomers.
Lies on lies.
“They think people are stupid.”
Dedicated NPR listeners ARE stupid, for the most part.
Every one of those assholes would be shot at, and then the survivors can watch the occupant set the booby traps that will burn the place to the ground once enough have set foot inside.
This is what will happen all across the country if they ever attempt to go that route. Most Americans are armed and only the morons who aren’t will be ejected from their own house without a fight.
Wait until the squatters start renting an AirBNB house for the weekend and just decide to stay for a year or two
Many journalists own homes they dont need, maybe they should be forced to sell and move into a nice condo so youngins can buy a home.
Is it now NPR who gets to decide the appropriate house size for Americans?
:-))
I have a post war 3 bedroom home I purchased in 2007. It’s small with the 3rd bedroom on the second floor. Laundry is in the basement and when it’s time, I’ll just purchase a portable washing machine and dryer (had a set when living in an apartment in LA - it’s wonderful). Home is paid but property taxes are HIGH because of my city and all the 1-2 million dollar homes they’re building when they tear down the post war homes. I plan to stay here until I die or have to go to assisted or skilled nursing. Then I’ll use the money from the sale of my house to get a single room with no roommate!
Notice that downsizing the government, growing the economy, cutting property taxes are NOT on the menu.
Without those, what good is...snort...enticing seniors out of their larger homes?
Who can afford them?
*Wait until the squatters start renting an AirBNB house for the weekend and just decide to stay for a year or two*
Not if the landlord is Bernie Goetz.
Bad idea. Back in the 1980s, my siblings were convincing my mom to sell her large home and move into an apartment. I blocked that idea, telling my mom how foolish it would be. "You don't think rent prices go up? Then what will you do when the money is gone?". She then said "I didn't think about that."
I then arranged a meeting with a poor sister and her husband, and got them to arrange buying another lesser home with my mom as owners, and they would care for my mom. Mom sold her home, paid the down payment on sister's new home, and sister paid the monthly mortgage. Mom kept her remaining money from sale of her home, and didn't have any monthly rent obligations. Worked well for Mom and sister's family.
Of course, rents and home prices exploded higher after that. She wouldn't have afforded the higher rents, and my sister enjoyed the equity increase in her home.
Since when is it NPRs jurisdiction to tell people if their houses are too big?
The same idiot reporters who are amazed to find that 30% of boomers have adult children living at home. So much for all that extra space the weenies at NPR want to donate to “newcomers.”
NPR is the TASS of the Deep State, they get the official Party Line.
Depends on the individual and where.
Worked for me. I still pay less per month than my mortgage was even in it’s last 8 years.
If your credit rating is good, yes. It is against the law to discriminate based on age.
NPR Listeners may well be Liberal but most of all they are selfish! They will donate, vote to feel good and gain bragging rights but do nothing that will impact their lives—like sharing their homes or moving to a small, micro-house in the boonies. Its about feeling good and many are not feeling so hot under Biden’s economic tyranny of the environmental loonytunes.
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