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Home Ownership for Retirees - Stay? Go? Move to the Villages? Refi?

Real Estate Agent with Keller Williams Capital Properties DC AB15253

Transitioning from a family home to a new property can pose challenges for retirees, particularly when searching for a suitable alternative. In many areas, including the DC metro area, builders are primarily constructing four-level townhouses or luxury single family Craftsman homes, which may not be ideal due to the increased number of stairs. The limited availability of single-floor homes means that those few suitable options are quickly sold once they hit the market.

Furthermore, new condos in this region often cater to a luxury lifestyle, reflecting the high cost of land. As a result, they may not align with the needs and budget of retirees seeking more practical and affordable living arrangements. An alternative for retirees in the DC area include communities like Leisure World in Silver Spring, which offers spacious accommodations at lower price points. This community provides large rooms and amenities tailored to the needs of retirees, presenting a viable option amidst the challenges of finding suitable housing in this competitive market.  However, it does mean living with a lot of other retirees, which may not be to everyone's liking. 

According to the New York Times today, approximately 80 percent of older adults currently reside in homes they own. However, economists are noting a shift in the traditional belief that a paid-off mortgage can function as a financial resource during retirement.

Homeownership is no longer universally advantageous for some seniors. Linna Zhu, a research economist at the Urban Institute, poses a critical question: "Are they aging in place, or stuck in place?" This inquiry challenges the assumption that homeownership is universally beneficial for aging individuals and prompts a reconsideration of the "American dream" in contemporary society. The proportion of older adults carrying mortgage debt has steadily increased over the decades.

According to the Harvard Joint Center for Housing Studies, between 1989 and 2022, the percentage of homeowners aged 65 to 79 with mortgages rose from 24 percent to 41 percent. Moreover, the inflation-adjusted amount of debt owed also soared, from $21,000 to $110,000 during the same period.

This trend underscores the evolving landscape of homeownership among older adults and raises questions about its financial implications for retirement. The financial strain caused by larger mortgage balances, higher interest rates, property taxes, insurance, and other housing-related costs has resulted in 43 percent of older homeowners with mortgages becoming "cost burdened," defined as spending 30 percent or more of their income on housing expenses.

Despite these challenges, the median home equity has experienced a notable increase, rising by $80,000 in just three years to reach $250,000 in 2022. This rise in home equity is a key factor in why the Center for Retirement Research at Boston College recently adjusted its estimate of American households at risk of not maintaining their standard of living after retirement.

According to the Center's calculations, its retirement risk index decreased from 47 percent in 2019 to 39 percent in 2022. Although this figure is still concerning, it represents the lowest level recorded by the center in its 20 years of tracking this index. The Center's calculations include assumptions about older homeowners utilizing their home equity through reverse mortgages.

This type of financial instrument can provide older homeowners with additional financial flexibility and stability during retirement. However, despite the potential benefits of utilizing home equity, very few older homeowners actually opt to take a reverse mortgage or otherwise tap into their housing wealth. Jennifer Molinsky, who oversees research on housing and aging at the Harvard center, describes a paradoxical view of homeownership, where accumulating housing wealth is seen as a safety net for later life—a nest egg or cushion.

Yet, homeowners are often reluctant to access this equity, preferring to leave it to their children or reserve it for emergencies. Accessing home equity can also be complicated and costly. Federal reverse mortgages (Home Equity Conversion Mortgages, or H.E.C.M.s) entail significant upfront costs and involve substantial paperwork. In 2022, only 64,500 older individuals received reverse mortgages through this federal program.

Furthermore, older borrowers often face difficulties in refinancing due to reduced income after retirement. Home equity lines of credit (H.E.L.O.C.s) are also increasingly denied to seniors, particularly at higher interest rates. Additionally, maintenance costs rise over time as houses age alongside their owners. The shortage of suitable and affordable homes for older adults further complicates downsizing, even for those with substantial housing wealth.

This housing market challenge can lead to feeling "locked in" when individuals are ready to transition to a different living arrangement. Black and Hispanic homeowners, in particular, face precarious situations because a significant portion of their wealth is tied up in their homes.

Anthony Webb from the New School for Social Research highlights the widening inequality in homeownership, noting that minority homeowners typically have fewer liquid assets due to lower lifetime earnings. Policymakers have the potential to expand options for older adults by enhancing and streamlining federal H.E.C.M. programs, broadening criteria for refinancing and H.E.L.O.C. loans, and promoting the development of more housing options suitable for older buyers and tenants.

Despite the challenges and complexities, experts maintain that homeownership remains a potent wealth-building tool for older adults. Even with mortgages, homeowners are better protected against rising housing costs compared to renters and can leverage home equity to finance long-term care expenses.


I have spoken with several people here in the Rain who are generally my age (70 plus) and we are all happy in our current homes - where we have been for 20 years or more.  I think part of our satisfaction stems from the fact that we are still working.  We get out every day and interact with lots of people.  We are still making money - and can generally afford the cost of maintenance.  And in many instances - I suspect we are too busy to consider the upheaval involved in downsizing.  So - my advice to all of us - Carry On! and Enjoy.  

Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good afternoon Lise,

Very interesting post and informative about home ownership for retirees. Most of my listings last year where from retirees who have been in their home a minimum of 20 years. They found no need to move until now and made the decision to relocate closer to their children and grandchilden. I have a single story and lived in my home for 30 years now, own it free and clear and have updated it many times. I'm not going anywhere!

Apr 20, 2024 01:33 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

And Dorie Dillard Austin TX- my last paragraph was really for you and Nina Hollander, Broker  - Hugs to you both

Apr 20, 2024 03:21 PM
Jeff Masich-Scottsdale AZ Associate Broker,MBA,GRI
HomeSmart Real Estate - Scottsdale, AZ
Arizona Homes and Land Group/ Buy or Sell

Thanks for your thoughts on retiree housing Lise Howe . Here in Arizona we have so many active lifestylel 55+ Communiteis from Sun City to Leisure World to Trilogy and so many more. Great activities and meeting so many new friends is big bonus. Jeff

Apr 20, 2024 09:02 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Loved your post, sadly most of my clients have no desire to move unless out of state that is all because of interest rates being over 7% and they are comfortable with their 3%:)Endre

Apr 20, 2024 09:44 PM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Lise Howe I totally got your "message," Lise. I hate when people try to lump us early Baby Boomers into some homogeneous group. We are not all the same by any means.

Apr 21, 2024 04:32 AM
Kat Palmiotti

I agree Nina Hollander, Broker - All of the posts about any group of people drives me nuts for the same reason.

Apr 21, 2024 04:56 AM
Kat Palmiotti
eXp Commercial, Referral Divison - Kalispell, MT
Helping your Montana dreams take root

There are definitely options available for retirees; this is a great post to outline the alternatives.

Apr 21, 2024 04:57 AM
Brian England
Ambrose Realty Management LLC - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

I don't like to move, so I hope that I will not have to make many moves in my lifetime, haha.

Apr 21, 2024 06:07 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Some interesting facts regarding grown-ups and aging in place. especially with the numbers showing more taking on debt.

With cost of living going to high and many seniors living on fixed pensions, their home has become their reserves, and they are going through that quickly.  I have done a few reverse mortgage short sales lately and the lack of reserves was the culprit.

Apr 21, 2024 09:45 AM
Randy Mitchelson,APR
Marketing Advisor & Squeeze Mortgage - Bonita Springs, FL
First Impressions are made at First Click

The Villages are undergoing a massive expansion of the next 10-20 years. Where there's a will there's a way. People will figure it out and make it happen to live their best life.

Apr 21, 2024 01:38 PM
Joyce Marsh
Joyce Marsh Real Estate LLC - Daytona Beach, FL
Joyce Marsh Homes

Personally I like living in a neighborhood with a diverse age group. I like seeing young people and children. Makes me feel younger. But that’s just my preference.

Apr 21, 2024 06:42 PM
Patricia Kennedy
RLAH@properties - Washington, DC
Home in the Capital

Really well done, Lise! 

I recently considered a move to a condo building I’ve loved for years. When I sat down and did the numbers, however, it made more sense to stay put. When I looked at condo fees (verses rental income from a basement in-law suite), and the whopping capital gains taxes that I’d have to send to the IRS, the move didn’t make a lot of sense.   And staying put leaves me in a community I love and with a lot of possessions I would have to reluctantly part with in a downsize. 

It’s not a simple decision unless there are mobility issues that make living in a house a challenge.

Apr 23, 2024 07:04 AM
Ginger Harper
Coldwell Banker Sea Coast Advantage~ Ginger Harper Real Estate Team - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

I have heard a lot ABOUT  the Villages.   Some good and some bad.  What is your experience with this community.

Apr 23, 2024 11:28 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Lise:

There are certainly plenty of issues for retirees/seniors to consider in terms of their living situation (size of house, stairs), the financials, community, and so much more, and you've provided an informative discussion for consideration.


Apr 23, 2024 03:32 PM
John Juarez
The Medford Real Estate Team - Fremont, CA

Excellent information. Well written and pertinent for so many homeowners. We have been in our home for decade. With a one-story home in a great neighborhood, what's not to like. If we were to sell, we would be subject to a large capital gains tax which is a major obstacle to ever selling our house.

Apr 26, 2024 08:54 PM