While normal variations can be found across the country, by and large the sentiment around aging in place in one’s own home appears to be a far-and-away preference for many Americans in or near retirement. This is impacting the moving and homebuying activity in certain areas, according to housing professionals who spoke recently with Realtor.com.
Citing a December study by senior advocacy organization AARP regarding the general preferences a majority of older Americans have for aging in place, real estate agents told the outlet that the preference is having an impact on their businesses among older Americans.
“High mortgage rates have made moving or buying a new house less appealing,” said Ebonee Johnikin, a real estate agent based in Laurel, Miss. “Many baby boomers have already paid off their homes or have a low fixed mortgage that they don’t want to give up.”
But that may not be the only reason, she said. Emotional attachment to the home itself or the community it sits in can be a powerful deterrent for moving activity, she added.
“Especially here in the South, many have a deep emotional and cultural connection to their homes. Homes have a sentimental and even generational value,” she said. “Aging in place feels more comfortable and more in control for them as they try to preserve independence, familiarity, and routine.”
Barbara Schreihans, CEO and founder of a consultancy called Your Tax Coach, noted that many of her older clients have a clear preference to remain in their homes instead of opting for other options, like assisted living or moving.
“We’ve seen a lot of baby boomers staying in their houses because they’ve gained a lot of equity and don’t want to have to pay capital gains taxes,” she said. “This is a really great strategy, because if your kids inherit your house after you pass away, they could sell the property tax-free.”
But this is also proving not to be a universal truth. According to a report published earlier this month by the National Association of Realtors (NAR), baby boomers have again overtaken millennials as the largest demographic cohort of homebuyers over the past year.
They tend to have a competitive advantage in this market, since they can typically make a cash offer compared with younger buyers, who have not had enough career tenure to build up their cash reserves to the same levels.
Many older Americans have also opted to remain working for longer, but the rise in baby boomer homebuying could also be seen as a potential boon for the reverse mortgage industry. For companies with dedicated personnel for Home Equity Conversion Mortgage (HECM) for Purchase (H4P) deals, relocating or downsizing could be made easier for some qualifying buyers.
Representatives from Fairway Independent Mortgage Corp. previously told HousingWire’s Reverse Mortgage Daily (RMD) that it will seek to expand its H4P business this year. Jim Cory, who helps lead the reverse division at Guild Mortgage, has lauded H4P as a path to better explain the potential value of a reverse mortgage to forward partner prospects.
But H4P has historically struggled with originations compared to the traditional HECM. Despite sustained reverse mortgage industry efforts, H4P loans have not managed to break through to a meaningful degree with reverse mortgage customers.
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