Seniors who are aging in place hold 1.6 million housing units off the market, according to the February Insight, released by Freddie Mac on Wednesday. The report sheds light on today’s housing shortage and pointed out that senior choosing to age in place is a key factor contributing to it. This has also been identified as a significant barrier to young adults buying their first homes.
“We estimate that approximately 1.6 million more senior households are staying in place than would have been the case if they had behaved like previous generations of homeowners,” said Sam Khater, Chief Economist at Freddie Mac. “For scale, 1.6 million units is roughly the same as the number of new single-family and multifamily housing units built each year, and it represents more than half of the current shortfall of 2.5 million housing units that we estimated in our December Insight.”
Khater also indicated that the additional demand for homeownership from seniors will increase the relative price of owning vs renting, “making renting more attractive to younger generations.” “This further highlights the importance of addressing barriers to the production of new housing supply to help accommodate long-term housing demand,” he added.
Among the key highlights of the report, seniors born after 1931 were found to be staying in their homes longer leading to higher homeownership rates for this group compared to previous generations. Freddie Mac estimates that 1.1 million existing homes have been held off the market through 2018 by those born between 1931 and 1941. Another 300,000 units are being held off the market by those born between 1942 and 1947, per the report estimates. Baby Boomers born between 1948 and 1958 hold another 250,000 off the market, the report revealed.
Quoting data from the Urban Institute, the report stated that 3.4 million millennials are missing out on homeownership. The projection is that the trend of seniors aging in place will continue to record an increase, as both the number of seniors increases and the barriers to aging in place are reduced. Community satisfaction and quality of life were cited as the two reasons keeping senior homeowners in a particular place.
Read the full report here.