People are wanting to age in place – remain in their current homes. This is not wishful thinking. It’s a fact. AARP reports that as many as nine out of ten seniors want to stay in their current home for the remainder of their lives even if those homes are less than ideal for meeting their needs and notwithstanding illnesses or limiting conditions they may have.
On many home renovation shows on networks like HGTV, the subjects of the home modifications frequently mention that they are looking for the forever home when all of the improvements are done or claim that they have achieved their forever home when the work in completed. This is a frequently used term.
Additionally, the National Association of Home Builders (NAHB) reports that many Millennials are purchasing homes that they intend to live in for decades and their first-time home purchase may be their only home purchase. We have seen evidence that the so-called starter home that people used to purchase before making additional moves into other homes with more value and larger layouts has given way to a more substantial investment in a larger initial home that can suffice for a lifetime – with or without raising children in it.
Not only this, but the NAHB now reports that the average household (more than fifty percent) has lived in their same home for more than thirteen years. This number has been increasing steadily over the past few decades. Gone are the days we experienced in the later part of the twentieth century (the sixties, seventies, and eighties especially) when people we highly mobile – moving at the rate of once every five years on average.
So, today – and the trend for aging in place is growing rather than shrinking – people are staying in one home longer than ever before. This isn’t everyone doing this, but enough people (and not just people we consider seniors) are doing this that the market may soon see an impact. We have people in their thirties and foorties that are busy raising families and building their careers that may not find looking for another home practical or prudent for them. Them we have those in their fifties and older who are winding down one career and getting ready to launch a new business, consulting, repair, service, or retail business. Maybe they have been doing this for a while parttime while their main profession or occupation has been getting toward the end of the time they can remain there. Some firms have a retirement age that is observed, and others have physical demands that make it easier to pursue something else.
People starting a second business, or remaining where they are if they already are running a business, also tend to be staying in their current residence. This provides a lot of ability for them at this stage of their life, and they probably like their homes quite well anyway. We know that the Baby Boomers as a group are staying where they are in terms of the homes and using their time that might otherwise be devoted to house-hunting and moving for volunteer work, remodeling or redecorating their present home (with or without outside help), visiting with friends and family, taking trips, working their bucket list, pursuing hobbies, or starting second careers.
This means that homes that have been occupied for a few years (perhaps several years) are going to continue to be unavailable to the resale market. Regardless of someone’s age, from Baby Boomers to Millennials or anywhere else on the continuum, people are remaining in their present homes. This means that the supply of existing homes is relatively low. In some markets, they are at very low levels, and they are purchased (often for more than the list price) as soon as they hit the market. Some Millennials are continuing to rent because they can’t afford to purchase or what they want doesn’t stay on the market long enough for them to get there.
To supply homes for people to purchase since the traditional supply of them has been interrupted by people remaining in place, builders are adding new construction at a rapid pace. There’s a potential issue brewing, however, with the influx of new homes to counteract the dearth of available resale homes (at all levels of the marketplace but especially the middle to luxury ranges), are we approaching a time when there will be a tremendous number of available homes – say in twenty or thirty years – as Boomers no longer need their homes and their children don’t take them either? What will that look like and what will it mean to the economy? There could be a precipitous price drop as a result. There certainly could be a surplus of homes.