Seniors Aging in Place Limit Supply of For-Sale Housing, Leaving Fewer Options
A growing number of seniors are staying in their homes longer and limiting the supply of houses for sale, and real estate executives and analysts say that’s combining with higher mortgage rates and a tight supply to push aspiring homebuyers toward single-family rentals.
Senior couple on porch Shutterstock_566888527 Households made up of those at least 65 years old increased 51.2% between 2007 and 2021, far eclipsing the 4.4% gain among non-senior households, according to a study by economic advisory and data science firm Chandan Economics for multifamily lender Arbor Realty Trust. That has been a major force in limiting supply and increasing pent-up demand that the report concludes is “poised to continue growing.”
A big driver in that group are baby boomers, those 59 to 77 years old, who have been driving societal and cultural trends for decades. More of these seniors staying put means fewer opportunities for younger generations to buy, and those who aren’t in a position to purchase a house often end up planning to rent longer.
That’s resulting in young families increasingly choosing to rent single-family homes, some by choice but many because they can’t afford to buy, analysts said.
Jonathan O’Kane, vice president at Chandan Economics, said the build-to-rent market is also affected to some degree by seniors choosing to stay in their homes.
That effect on limiting supply is amplified by another trend: “Builders no longer are constructing the types of sub-1,400-square-foot homes that used to make up the starter home inventory,” with “fewer affordable entry points to homeownership for younger households,” O’Kane said in an email.
Higher Mortgage Payments
At the same time, mortgage rates have soared, reaching about 6.54% for a 30-year fixed mortgage, more than double the rate at the end of 2021, according to Mortgage News Daily.