Empty nest: Deciding when to downsize
There’s a new “real-estate headache: Baby Boomers who won’t sell their homes,” said Aimee Picchi in CBSNews.com. In previous generations, Americans entering their early 70s—as the oldest Boomers are now—typically downsized into condos and apartments. But Boomers “are healthier and working longer than previous generations,” and showing less inclination to relinquish their longtime homes. Americans over age 65 have the highest ownership rate of any generation—80 percent, compared with 35 percent of those under 35. And with 85 percent of seniors not intending to sell in the next year, they’re adding to an “ongoing inventory crunch” in the housing market. A few factors could be at play: More seniors are now in the workforce than at any time since 1948, so they may not be ready to move. And many have kids who haven’t moved out: More than one-third of adult children still reside in their childhood home. “Downsizing is increasingly shifting to very old age, when Americans are in their 80s.”
We’d love to move, said Mark Pothier in The Boston Globe, but we “can’t afford to.” After 20 years in our home south of Boston, we have “a pile of equity” built up. Our youngest child just moved out, and we’re ready to “ditch the drudgery of yard work and upkeep for a simpler life governed by condo association rules.” But we can’t afford to sell in this market, at least “not without exiling ourselves to a place where we don’t want to live.” Most condos, with “marked-up amenities like $60,000 kitchens,” are now out of our price range—and we aren’t alone. “When did downsizing become as expensive as upsizing?” Many Boomers simply assume they can “take advantage of equity and the sellers’ market” to cash out and buy a smaller place, said Kevin Simpson in The Denver Post. But they “run into trouble trying to find something comparable if they choose to remain in the area.” That’s why many are deciding to use their equity on remodeling and adding aging-in-place features, with the aim of one day leaving the house to the kids.
How do you know if downsizing is the right move? asked Tanisha Sykes in USA Today. Run the numbers, factoring in the cost of selling your current home, your relocation costs, and the fees associated with the purchase of a smaller home. “The amount of space you have may also influence your decision to scale down.” Seniors can also choose to rent a smaller place and invest the profit from selling their home to generate more income in retirement, said Casey Dowd in FoxBusiness.com. And in the end, “it may make more financial sense to not downsize at all.” Even simply doing an aggressive decluttering could make life in your old home easier to manage.