How the Recession Impacts Baby Boomer Housing

The current recession is likely to keep many baby boomers from moving to new homes during their retirement, according to a recent Associated Press poll. But an analysis by AARP suggests that staying put may not provide boomers with the financial safety net they need to live comfortably.

Move or Stay? 

More than half (52%) of baby boomers responding to a recent poll conducted by the Associated Press and LifeGoesStrong.com, say they are unlikely to move from their homes in retirement unless it is to buy a smaller home that’s more affordable and closer to family. Older boomers are more likely to stay put. Almost half (48%) of this group say that it is extremely or very likely that they will stay in their current homes during retirement, compared with 35% of younger boomers. Those who have lived in their current home for 20 or more years are also more likely to say they won’t move.   

Financial worries are driving the decisions to stay at home. Only 9% of survey respondents said they are strongly convinced they will be able to live comfortably when they retire. Almost three-quarters (73%) said they will keep working during retirement.

Digging Deeper into Housing Trends 

An AARP analysis of data from several sources, including the 2009 American Community Survey, shows that a combination of tightening credit, declining housing price, shrinking home equity, foreclosures, job losses and unemployment has reduced housing stability for older homeowners over the past decade. Fewer older adults can sell their homes, and those homes no longer provide a financial safety net for their owners. Specifically, housing stability for older adults has been eroded by:

• More mortgages. Fewer older adults owned their homes outright in 2009 than in the previous decade. In 2000, 40% of homeowners age 50 and older owned their homes free and clear, compared with 38% who had a mortgage. By 2009, those numbers had flipped: 38% of older homeowners were living without a mortgage while 42% were still paying off their homes.  

• More foreclosures. There were 49,980 foreclosures and 636,003 delinquencies among households age 50 and older at the end of 2007. As the housing crisis worsened, those figures undoubtedly rose much higher, says AARP.  

• More disability. Rising disability rates are impacting housing security among older adults, according to AARP. In 2009, 42% of renters and 32% of owners aged 50 and older had a disability, compared with 54% of renters and 42% of owners aged 65 and older. Given the fact that people age 50 and older are likely to live in older homes that lack accessibility features, AARP predicts that it will become increasingly difficult for members of the growing older population to find housing that meets their needs.