Older homeowners stuck in homes as market prevents them from moving

When they bought their Highlands Ranch home in 1998, Kent and Yvonne Higgins and their children fit comfortably into the five-bedroom, multi-level house that was typical in the sprawling suburban development.

But life’s milestones came and went, and kids grew up and struck out on their own. The couple paid off their mortgage and had the entire house to themselves, though Kent’s multiple knee replacement surgeries reminded him that the 16 stairs between floors wouldn’t be getting any easier to negotiate.  

And eventually, they arrived at a common fork in the road: Was it time to move to something that better fit their lifestyle? After looking at their choices in Colorado’s superheated seller’s market, they came away so discouraged that they’re starting to consider another option: installing an elevator.

“There’s one that’s pneumatic, and there’s the other one that is gear-driven, where you can move from the first floor to the second floor and that’s in the $30,000-$40,000 range,” says Kent, at 76 retired from a wide-ranging career in writing and teaching. “And that sounds expensive, but when you think about what’s out there and the cost of moving and everything else, every day it gets more attractive.” 

For many older adult homeowners, the idea of downsizing or simply moving to a home where the design and layout — plus accompanying financial considerations — makes more sense has run up against some of the same challenges that vex even first-time homebuyers. Few available options fit their needs, and those that do tend to be outrageously expensive.

The inventory problem statewide, encompassing all types of homes, sets the stage. The Colorado Association of Realtors uses a metric called the “months supply,” which calculates how many months it would take, under current market conditions, to sell out of housing inventory. The group started keeping the statistic in 2014, when the number hovered around 4, a “good indicator of a balanced market,” says spokesman Matt Leprino. 

“Ever since then, it’s been in kind of a free fall,” he says.

In 2015-16, the number dropped to the 3s. In 2017 and 2018 it fell to the 2s, then into the 1s in 2019 and early 2020. At no point this year has it risen above 1 — meaning there’s less than one month of inventory statewide. 

“There wasn’t a lot of foresight to the Baby Boomer generation transitioning to single-level living.

Zach Zeleski, real estate agent

Smaller, so-called starter homes have become scarce as they’ve faced a three-pronged assault from potential buyers: young people looking for a toehold on homeownership; older adults cycling back to something smaller; and investors trolling for potential rental properties, says Keller Williams agent Zach Zaleski, who has helped Kent and Yvonne Higgins search on and off for the past two years.

“So I think it causes problems for lots of people that so many of those homes have been picked up,” he explains. “And it’s not only a problem for those young couples looking, but also those older, retiring couples because they’re all essentially competing for the same product.

“Ranch-style homes tend to be relatively rare in most parts of town. You can find some that are small and modest, but even those aren’t set up for single-floor living, because the laundry’s in the basement — that’s a real issue. Housing stock was built as America was expanding, and a lot more babies were being made. There wasn’t a lot of foresight to the Baby Boomer generation transitioning to single-level living.”

Nationally, baby boomers own an increasing share of the nation’s homes — from about 44% at the onset of the Great Recession to 54% in 2019, U.S. Census figures show. In Colorado, nearly 84% of boomers — defined as being born between 1946-64 — own their homes, including more than 30% who own them free and clear of mortgage debt, according to the 2019 American Community Survey. 

Those statistics, coupled with an AARP survey that shows 76% of adults 50 and older prefer to stay in their residence to “age in place,” offer at least one explanation for low housing inventory.

Add Colorado’s current exploding home prices to the equation and many older adults end up staying right where they are — further limiting home inventory available to younger buyers, says Colorado AARP state director Bob Murphy.

 “This is an issue I’ve been working on a long time,” he says, “and it’s somewhat connected to the theme of the giant disconnect between what’s available on the market and how Americans are living these days. I don’t need a 3,000 square-foot house. 

“But look at what’s happened over the last 10-20 years. I mean, now they’re building them bigger, right? People are rattling around homes that even they acknowledge are too big for them. They just don’t have an alternative.”

About more than square footage

Myles Crane, 78, has been tracking the difficulty older adults have with housing options from multiple vantage points, most recently as chair of the Fort Collins Senior Advisory Board and on the state level with the Colorado Commission on Aging. He also has personally witnessed the current insanity of the state’s real estate market as he has helped his adult son try to relocate from Ohio after he took a job in Denver.

(After the trials of competing with cash offers, prices that outran appraisals and other quirks of the market, he found a place in Severance — a small community east of Fort Collins nearly a two-hour commute from his employer.)

The concept of downsizing doesn’t just equate to less space and purging a lifetime of stored belongings, Crane notes. Economic factors like a lower mortgage or rent and eliminating discomforts of a particular neighborhood — think noise, pollution, COVID risks or even troublesome neighbors — can weigh in favor of a change.

“In addition to all that, there’s access and mobility for older people, better transportation options, being closer to family or friends, access to better medical care,” Crane says. “And then there’s what older adults can do to decrease the daily challenges that so many of them face, from steps to the need for better lighting or other obstacles.”

But, he adds, homes under 2,000 square feet, ranch style with two bedrooms, simply aren’t available in northern Colorado. “The specs that we’re looking for for older adults, the smaller home, reasonably priced, at this point does not exist.”

That’s what Leprino, the spokesman for the Colorado Association of Realtors, found in the Denver metro area not long ago when he helped his early-70s parents look for a single-floor layout. Fortunately, they had the means to find a lot and build to their specifications.

“It wasn’t their first choice,” he says. “But it was quicker. There’s just not that many homes that have been built that are by any stretch of the word new, that have that kind of main-floor living. Because our real estate has just gotten so expensive, these builders that are building brand new properties — if they’re not custom — the land is too valuable to only put a ranch on the land. They can make significantly more money by doing a two-story.”

During his son’s search for a home, Crane encountered a retired couple selling their home in Loveland with a plan to travel the country living in a trailer — a pre-planned, two-year adventure that would culminate in using their proceeds to buy another place in what they anticipate might be more favorable circumstances.

The current market conditions have led some older adults to seek other options outside the craziness of the real estate market, whether that means taking younger boarders into their homes to help them age in place or pursuing accessory dwelling units (ADUs) on their property that can help them remain in the same location while also providing an entry to home ownership for relatives. Older adult advocates also are supporting mobile home owners as a means of maintaining affordable housing choices.

“One interesting twist to the story is the similarities, the overlap between the needs of the younger generation and older generations,” Crane says. “They both have housing needs. They both need access to transportation.” 

A new financial reality

Real estate agent Sarah Schilz specializes in helping older adults in northern Colorado through Remax Advanced Mountain Stream Home Team. About five years ago, she left her job as a nurse’s aide and went into residential real estate, in part because she could see the challenges that were already confronting the aging Baby Boomers, and there seemed to be a void in the market.

“Everyone was focused on getting millennials to buy houses,” Schilz says. “It made sense that somebody needed to take care of the older generation. It’s been very well-received.”

Downsizing — more specifically, the roadblocks posed by Colorado’s crazy market — has become a common theme among her clients. At a time when many older homeowners have finally paid off the mortgage and hope to cash out, live smaller and maybe even have some of that equity left over as a cushion, astronomical prices and sparse inventory have created a new and difficult reality.

“We see people making lateral moves,” Schilz says, “but really at this time in their lives, they should be having a smaller mortgage — or no mortgage at all. They don’t need as big of a home, they don’t need a big lot, stuff like that. But instead of getting a lower mortgage, they’re getting a home for the same price as what they already have. So their financial burden isn’t decreasing, which is frustrating, to say the least.”

They’re getting a home for the same price as what they already have. So their financial burden isn’t decreasing…

Sarah Schilz, real estate agent

Part of the problem centers on the housing needs and desires often associated with this demographic. Single-floor living looms large as stairs present an ever more burdensome challenge, but ranch and so-called patio homes are in particularly short supply in a tempura-hot real estate market. 

Schilz says that many folks who bought in the 1980s in Fort Collins found the market filled with split-level homes. Patio homes came along in the ‘90s and offered an option with updated building materials and less maintenance.

But with sparse inventory, even new construction offers only minimal options, she adds. Like Leprino, she notes that builders don’t build many single-floor ranch-style houses because there’s little economic incentive. 

“They’re scarce,” Schilz says, “and that’s frustrating because people are really needing that. They’re just hard to find and you pay a premium for ranches, so it’s a challenge.”

In the current climate, she adds, the operative strategy is “drive until you qualify.” And that’s part of why she recently obtained her real estate license in Wyoming. She has seen older adult sellers head north of the border to relocate in areas like Cheyenne because it’s a smaller community with a “slightly slower life pace.” 

“And there’s space to build patio homes,” she says. “There’s space to build what they want — and the costs work.”

“Lots of equity, nowhere to go”

AARP put out a booklet in 2019 called “Making Room” that looks at a number of demographic and housing issues. What Colorado director Murphy calls the “bumper sticker” quote that encompasses the big problem is that 53% of Americans live either alone or as couples, but only 12% of the nation’s housing stock is studio or one-bedroom homes.

The dearth of smaller homes hurts both ends of the age spectrum, Murphy adds. Older adults looking to downsize have few choices, but the same can be said for younger adults looking to start building wealth through homeownership. 

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But that’s not the direction home inventory has moved. Murphy found that when he and his wife prepared to downsize from their Lakewood home, they couldn’t find anything nearby that was smaller and with less upkeep. They eventually snatched up a townhome in Littleton, where they found themselves neighbors to many residents who had been seeking the same features.

In a market like Colorado’s, homeowners looking to downsize can find themselves in an unanticipated position. While they once may have planned to cash out their equity, buy a smaller place in the same area and even have something left as a cushion for retirement, now they face an entirely different, and less favorable, calculus.

“Lots of equity, nowhere to go,” Murphy says. “They have to take all that equity, every dime of it, to buy another place. So you start to see things like shared housing concepts, older adults living together. Services that provide multi-generational housing. Co-housing concepts with community kitchens. There are a variety of approaches, but they’re a minuscule part of the marketplace. Tiny homes — that’s not for everybody. People are nibbling at solutions around the edges, but the fundamentals are not addressed in terms of product.”

Schilz, the Fort Collins agent, sees some older adults who have decided to make lateral moves discover it might require two or three more years of saving and planning to pull off buying a property that works better for their lifestyle — but that costs more than they anticipated.

“Nobody wants to accept that when your Realtor walks in and says, ‘Well, your house is worth $450,000, and you’re probably gonna find a patio home for $425,000,’ because that’s not the information that they want to hear,” she says. “So we’re seeing people stay put. We’re seeing people make modifications to their homes. 

“We are also seeing people accept that reality and do that lateral move. We’re also seeing people sell to rent and sell to move in with their kids, which is interesting. So I think people are getting a lot more creative with housing. And I think if we were smart, we would keep this in mind as builders.”

But for buyers struggling to navigate scant inventory, transitioning to a house tailored to the needs of empty nesters remains an exercise in futility that sometimes requires a touch of creativity to solve.

A little more than a year ago, Bill and Karen Musser downsized to an 800-square-foot residence on less than one-tenth of an acre, close to Evergreen Lake, that offered enough room for them to live comfortably but also gave Karen, retired from teaching, easy access to the picturesque town of Evergreen in the foothills west of Denver.

Bill, an engineer, still got up every morning and went to the office. For a year, they had absolutely no complaints. 

And then COVID hit.

“All of a sudden,” Bill recalls, “this little house, which was meeting our needs, became awkward because we’re both here, both on the phone, both on Zoom and Teams. One bedroom, nowhere to go, nowhere to hide.”

So the Mussers started to look for something around 950 to 1,200 square feet in the same vicinity. Karen, a yoga instructor, even emailed the 50 people on her class list asking if anyone knew of anything. That yielded nothing — and when something intriguing did come on the market, the feeding frenzy left them frustrated and disappointed. 

Now, after finding what they once thought was the perfect downsize, the Mussers are considering another route toward a slight upsize: an addition that would give them a little more breathing room and allow them to host their kids and their families — though not all at once. By Bill’s accounting, they can create enough space for about $10,000 to $15,000. And the math works a lot better than trying to find another property to right-size in a manic market.

“That’s better than spending $250,000 — and being aggravated because Karen kept falling in love with every house we bid on or were about to bid on and then they were gone,” Bill says. “They were just gone. Instantly.”