Recently I wrote about how construction since the Recession has not kept pace with population increases and household formations leaving the nation with millions fewer homes than it needs, which has driven up prices. Because construction isn’t keeping up the supply end of things, people are staying in their homes longer – especially older people.
You see, the real estate market is a “circle of life” industry whereby the young start out small and move their way up until the kids are gone and they’re older, at which point they downsize to lower-maintenance properties. This makes room for the next generation to move up to the next level.
According to FreddieMac, 1.6 million senior-owned homes are not shuffling along the real estate conveyor belt to make way for a new generation. That’s essentially a typical year’s worth of new construction and over half the estimated 2.5 million home deficit the country struggles with due to over a decade of underbuilding.
The hot term is “aging in place” and I see the appeal of living independently – just maybe not in an oversized house I can’t take care of. Of course part of the reason those 1.6 million senior homeowners aren’t moving is because there’s nowhere to move. It’s not like the construction industry was building retirement facilities instead of homes for the past decade. There’s not a ton of empty Shady Pines and Gossamer Meadows out there gathering dust.
And that’s not all.
A 2017 report authored by Marianne Cusato, an associate professor of Architecture at Notre Dame noted that of the homeowners surveyed aged over 75, just 14 percent had moved out of a prior home. Eighty-four percent reported either some level of home renovation (61 percent) or not renovating at all (23 percent) – but staying put.
In addition to holding up the housing market, the other issue with aging in place is that those renovations are age-specific by design. Once the owner’s daises have been pushed up, the renovations that made their last years easier are a turn-off to a younger generation.
Cusato’s survey also reported the most popular senior renovation projects. Some, like pullout shelves and drawers in kitchens, closet organizers, and various voice-activated technologies translate well for younger buyers. But smooth stone or tile flooring that facilitates wheelchairs and walkers may not appeal. Ditto moving a second-floor master to the ground floor, which places younger buyers away from growing children. There are also the mildly unseen/seen things like wheelchair-width doorways that look odd, and elevators that new buyers won’t want to maintain. And that’s not even mentioning those walk-in bathtubs or chair lifts. In short, few sex lives require grab bars.
Undoing Before Doing
The results of those renovations are seen as enhancing the value of the home for its occupants, but for a new buyer decades younger, it’s just an expense to remove. This can result in overzealous pricing and low-ball offers that don’t get the deal done.
The key to accessibility-based renovations is to think about undoing them before you even begin. Installing grab bars when renovating a bathroom? Save a few tiles and some grout in a Ziploc bag to make quick work of removing the bars and replacing the tile.
Those thinking of raising their electrical outlets a few feet off the floor may want to keep the existing socket and surface-mount a temporary one at the desired height. It’s pretty easy to undo and repair the wall – and a lot cheaper to install in the first place.
For some things, older sellers may simply need to eat the cost of uninstalling the walk-in bathtub and bringing back the normal tub. Millennial buyers are on a tight budget and are unlikely to have the money to undo those renovations themselves. After all, according to Down Payment Resource, 64 percent of Millennials feel they’ll have to indefinitely postpone their first purchase or rent forever. So if you have a Millennial buyer, you’re just lucky they scared up the down payment, let alone have a kitty for renovations.
Size May Not Matter
Of course, another problem is that Millennial buyers have postponed their first home nearly a decade compared with earlier generations. This means they’re more settled and less inclined to own as many homes. This means that once they find a good home that suits their needs (by mid-30s may already have all the kids they want) they, too, may stay put.
And whether it’s taste or driven by economics, Millennials seem to be more interested in smaller homes, which may mean the enormous McMansions of their parents and grandparents are less appealing.
So, in addition to oversized homes AND our nation being 2.5 million housing units behind AND 1.6 million seniors not downsizing, we have to deal with home renovations that will have to be undone by a poorer generation nipping at their housing heels.
Happy days Realtors, happy days. (Minus the Fonz.)
Remember: High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement. In 2016, 2017 and 2018, the National Association of Real Estate Editors recognized my writing with three Bronze (2016, 2017, 2018) and two Silver (2016, 2017) awards. Have a story to tell or a marriage proposal to make? Shoot me an email firstname.lastname@example.org. Be sure to look for me on Facebook and Twitter. You won’t find me, but you’re welcome to look.