Here's Another Reason Buyers Might Struggle to Buy Homes

Limited inventory has been a problem in today's housing market, and it could remain sluggish for one big reason.

It's easy to see why people grow attached to the homes they own. It's also easy to see why older people may prefer to age in place rather than move to assisted living facilities.

In a recent American Advisors Group (AAG) survey, 82% of seniors said they would live in their homes for the rest of their lives if they could. While some unfortunately may not get that choice if health issues require them to move, it's clear that a large number of older Americans have no intention to sell.

That could prove problematic for newer home buyers. In the course of 2021, housing inventory plunged to impossibly low levels. That's largely attributable to the fact that many people haven't wanted to sell their homes and move during the pandemic. But if more inventory doesn't hit the market soon, buyers may continue to struggle to find suitable homes.

In fact, the recent lack of available homes has caused property values to soar on a national level. Now buyers are being forced to pay a premium and take out higher mortgages to swing a place of their own. So it's not encouraging news for buyers that many seniors aren't planning to sell their homes.

The pandemic impacted seniors' feelings about staying in their homes

In the AAG survey, 50% of respondents said that the pandemic made them feel even stronger about aging in their homes and never selling. And right now, it's easy to see why so many older Americans feel that way.

Not only can a home be a source of comfort, but for many, it can also be a source of financial security. Because property values have skyrocketed over the past year, homeowners are sitting on more equity than ever before. So the idea of giving up a home may seem financially unsettling. In fact, 73% of seniors surveyed said they consider their home their most valuable asset.

Granted, this sentiment may have been true before the pandemic too -- and before property values started soaring. But given the recent surge in equity, it's not surprising that seniors are even more set on not selling. And since more than half of seniors reported that they've paid off their homes in full, it's easy to see why they'd rather stay where they are, mortgage free, as opposed to moving to a facility where they'd be charged a monthly fee.

Should buyers be concerned?

The concept of aging in place isn't a new one, but the pandemic may have solidified that line of thinking among some seniors. The reality is many older people don't sell their homes until they absolutely have to -- whether because they need to move somewhere for care or because they can no longer afford homeownership costs, like maintenance and property taxes.

In today's housing market, even small increases in inventory could make a difference in helping buyers come out successful. And once inventory picks up, home prices should start to come down.

Buyers shouldn't panic just because one survey found that seniors largely aren't planning to sell. But over time, the housing market could remain tight if more people opt to age in place and new construction can't keep up with buyer demand.