Seniors are said to be creating a barrier for young adults entering home ownership for the first time, due to not moving out of their homes and instead deciding to “age in place”, according to a report from Freddie Mac.
Freddie Mac’s February Insight report notes that around 1.6 million existing homes are being held off the market due to their owners’ decision to remain.
Those 1.6 million units amount to about the same number of new homes being built each year, and represent about half of the current shortfall of 2.5 million housing units that Freddie Mac estimates is missing from home inventories. Those homes are needed to accommodate population growth, Freddie Mac says.
“We believe the additional demand for homeownership from seniors aging in place will increase the relative price of owning versus renting, making renting more attractive to younger generations,” said Sam Khater, Freddie Mac’s chief economist.
The mortgage financer’s researchers reckons that 1.1 million existing homes were held off the market throughout 2018, due to those born between 1931 and 1941 deciding to age in place. An additional 300,000 homes remain occupied by those born between 1942 and 1947, and 250,000 are staying off market due to baby boomers born between 1948 and 1958 refusing to sell.
“The trend of seniors aging in place is likely to grow as both the number of seniors increases and the barriers of aging in place are reduced,” Freddie Mac said.
The Urban Institute in a second report said that around 3.4 million millennials are currently missing out on homeownership. With seniors now increasingly staying put, those people need more options, Urban Institute economists said.
Referring to those numbers, Khater said: “This further highlights the importance of addressing barriers to the production of new housing supply to help accommodate long-term housing demand.”