It’s a well-known trend: the average American retiree lists their home to downsize into a more affordable and manageable one, but the pandemic has impacted the idea of downsizing. A recent Merrill Lynch and Age Wave retirement study found 49% of retirees did not downsize in their last move and 30% moved into bigger homes. Another survey found 22% of respondents aged between 50 and 60 were looking to upsize while 43% enjoyed the size home they currently have. Older adults are choosing to forgo downsizing for numerous reasons, says CNBC, such as finding a better suited home and keeping space for visiting family.
So, why now?
What’s behind the shift, and why are retirees changing their spending habits? While the reason is ultimately a matter of personal choice that differs from person to person, a perfect storm has converged to make conditions more favorable.
Let’s look at interest rates: 2020 was a record-breaking year for interest rates, specifically those tied to mortgages. Over the last 12 months, interest rates have hit an all-time low 16 different times. They fell to a three-year low of 3.51% at the start of the year, and home sales began to surge.
Over the next business quarter, rates continued a steady downward trajectory, falling to 3.23% by April. Fast forward to year-end, when rates would decline to an unbelievable 2.66% just before Christmas. At the start of 2021, we saw the bottom with rates landing at 2.65%. Now, they are marching back toward 3%, making it the optimal time for established homeowners to refinance or purchase a new property.
Advertisement
Related Stories
New-Home Sales
Mortgage Rates Are Up but New-Home Sales Still Solid in March
Lack of existing home inventory drove a rise in new-home sales, despite higher interest rates in March
Labor + Trade Relations
Who's Earning What in Construction
Workers in construction management roles may earn a higher median wage, but on average, lower-paid occupations have experienced somewhat faster wage growth
Build to Rent
Build-to-Rent Is Booming, Particularly in These Metros
A recent report finds that the Phoenix metro leads with more than 4,000 build-to-rent units completed in 2023, and Texas is the leading state for build-to-rent development