Older Americans from the baby boom generation are increasingly becoming renters after downsizing their existing homes, with experts attributing the move to competition in the broader housing market, according to data from Harvard University’s Joint Center for Housing Studies (JCHS).
“Over the decade from 2009 to 2019, the total number of renter households was up 14%, but the number headed by a person age 65 and over jumped by 43%,” the JCHS research found. “Most of this growth reflects the 37% increase in households in that age group, although their rentership rate edged up slightly as well. Over the next two decades, the baby boomers will move more fully into the 75-and-over age group, the time of life when rentership rates typically rise, accelerating the growth in older renters.”
Competition in the housing market and tight inventory levels in different parts of the country are one potential cause for the trend, according to Clare Trapasso, the executive news editor at Realtor.com.
“Some boomers have sold their homes in recent years because they wanted to get top-dollar for their properties. But now they’re having difficulty finding new homes to purchase, given the lack of homes for sale and the competition in the market,” Trapasso told the outlet GOBankingRates. “They’re renting for longer than they might have expected.”
The trend is not restricted to necessity, however. Some baby boomers are choosing to enter the rental market as opposed to continuing to live in their longstanding homes, largely due to the convenience offered by some modern multifamily complexes.
“They don’t want to deal with the maintenance and repairs that owning a home requires,” Trapasso told the site. “They would rather have someone else fix the drain, cut the grass and take care of anything that goes wrong. […] Wealthier boomers are being lured by some of the newer rental buildings that have been coming online recently. They want the convenience and amenities these buildings offer, such as smart home technology, rooftop gardens and pools and prime locations. Many are located in desirable downtowns in popular suburbs and cities.”
There are certain financial implications to consider about renting in or near retirement, such as ensuring that the proceeds of a home’s sale will not be exhausted earlier than is desired due to ongoing rent payments.
“In some instances, renting may be part of someone’s retirement strategy,” Trapasso added. “It really depends on the individual, their goals, their financial situation and where they live. If they’re able to sell their homes for a large profit, it may be cheaper to rent than to stay in the home or downsize into a smaller one.”