• Three baby boomer homeowners told BI they want to downsize but can't find suitable options.
• Rising home prices have led to a big increase in their home equity over the years.
• But those rising prices also make it harder to find affordable homes for retirement.

As many baby boomer homeowners look to cash in on their home equity and downsize, some are grappling with a shortage of suitable homes.

Older homeowners are increasingly staying put, as mortgage rates and housing costs remain stubbornly elevated and inventory— particularly of affordable and accessible homes — is scarce. Some simply can't find a suitable home that would leave them with enough cash to retire on, while others simply don't feel downsizing is a savvy financial move with housing and borrowing costs so high.

Kim Cayes is one of those boomers who feel stuck. The 67-year-old always banked on selling her four-bedroom house in Parsippany, New Jersey, to help support herself in retirement.

"My plan had kind of been: save everything I can, and then when I retire, move someplace cheap and use the equity in my house to buy a house in cash to reduce my costs," she told Business Insider.

Cayes bought her home for $245,000 in 2000 after her divorce. She added a major addition and has since benefited from New Jersey's soaring home prices — the house was recently appraised at nearly $700,000, according to documents reviewed by Business Insider.

But Cayes, now semi-retired from corporate communications, is no longer interested in leaving northern Jersey for a cheaper part of the country. Two of her three adult children live with her, and she doesn't want to leave her community.

"I would hate to move somewhere and leave one of my kids behind because, not being married, my kids are all I've got," she said. "Especially as you get older, you need a network of people."

Cayes is looking for a single-story home in the $400,000 to $450,000 range. But she hasn't had any luck finding something suitable. She says the homes she's looked at would need a lot of work and aren't in familiar neighborhoods.

"Thinking I'm going to spend the final years of my life in a worse situation than I've ever been in — that's just so depressing," Cayes said. "Especially when my friends are all traveling around the world with their spouses and constantly posting on Facebook which countries they're in."

'A lateral financial move'

Some boomers who can afford to stay in their homes don't want to endure the costs and possible stress associated with downsizing. Even those who are still paying off their homes often have much lower mortgage interest rates than what they could get on the market today, hovering around 6.5%. And leaving a familiar home and neighborhood can be emotionally taxing.

Dorothy Lipovenko, 71, and her husband love the single-family home in a well-connected neighborhood of Montreal where they've lived for nearly 25 years. But the options to downsize in their area seem limited to pricey new condos and old homes that need major repairs. Lipovenko doesn't want to live in a modern condo without green space, but she also doesn't want to take on a home renovation project.

"It becomes a lateral financial move, and that is what has us saying 'no,'" she said. "Downsizing is a huge undertaking, physically and emotionally, and a one-for-one trade makes no sense."

Ideally, Lipovenko and her husband would move to a smaller, single-floor house — she dreams of a Levittown-style suburban starter home, she said.

"It's not just giving up possessions and going into a smaller space; it's shrinking a lot of things to fit a new mindset," she said. "I just can't see my husband and I spending the last decades of our life in a little apartment."

'I'm lucky I have this house'

Andrea S., 60, already lives in a single-story starter home in Sherman Oaks, California, that's well-suited for a retiree. But Andrea, who requested partial anonymity to protect her privacy, isn't sure she can afford to stay in it.

The former agent and producer bought her two-bedroom bungalow with her ex-partner in 1994 for $245,000. She's lived in the home ever since, hasn't made any major improvements, and has a housemate to split the bills with. The Zillow estimate, reviewed by Business Insider, found the house is now worth about $1.3 million.

"I'm lucky I have this house," she told Business Insider. "I just hate the fact that the house is pretty much my pension fund."

Andrea's income is lower than she expected it to be at this point in her life — she's struggled to work since suffering from a head injury in a car crash in 2021. Meanwhile, the pandemic and Hollywood writers' strike killed off some of her projects, she said. At the same time, maintenance and repair costs for her nearly 75-year-old house are daunting: the HVAC system needs to be replaced, and the pool and large yard are expensive and energy-intensive to maintain.

"If I can't get a job that covers me enough to cover my bills, then I have to think about do I sell the house," she said.

But she's concerned that she won't be able to find an affordable home in a neighborhood as pleasant and walkable as hers, especially on a budget that makes sense. After her crash, she gave up driving and wants to keep living in a place with bus access and grocery stores within walking distance. Plus, she's concerned about the capital gains tax she'll need to pay if she sells the home.

"I'm realizing now, at age 60, all the things that you become very vulnerable to, especially when you're a woman and you don't have a life partner," she said.

Andrea and her friends joke about their dream of retiring together in the British seaside town of Port Isaac — the idyllic setting for the early-2000s TV show "Doc Martin."

"You get some nice little cottage in town. They don't have big yards. And you walk out your door, and you see the lovely English coastline," she said. "That sounds good to me."

Are you struggling to downsize or find a suitable home to retire in? Are you otherwise affected by the cost of retirement housing? Reach out to this reporter at [email protected].

Before the war, Hamada Shaqoura was a food blogger. Now, he spends his days cooking to feed children and displaced people in Gaza. And he figured out a way to reach millions on social media without saying a word. His intense stare at the camera as he cooks various dishes has been easy for many to understand. Hamada finally opens up and shares his story with Business Insider. He told us why he sees food as a symbol of resistance and why it's important for him to cook food people had before the war, like chicken wings, tacos, croissants and popsicles.

• Baby boomer homeowners have benefited from skyrocketing housing prices amid a home shortage.
• But now they're facing a shortage of accessible homes to retire in.
• Many older adults are now stuck in homes they're increasingly struggling to live in and pay for.

Baby boomers have been the big winners in the US housing market, but as the generation retires, its members are facing a new challenge in finding accessible housing.

It's a problem they had a hand in making.

Homeowners in the generation — now between 59 and 78 years old —have seen their home equity surge, particularly over the past decade, as a growing home shortage across the US has pushed home prices sky-high.

But as the generation approaches 80, boomers are beginning to suffer from their own housing woes: a severe shortage of accessible and affordable retirement homes. Compounding the housing issue are the rising costs of healthcare and elder care.

With mortgage rates and housing costs high and inventory scarce, many older people are staying put. Nearly 80% of home-owning baby boomers recently surveyed by Redfin said they're planning to age in their current home. And as of 2022, empty-nest boomers owned twice as many homes with three or more bedrooms as millennials with kids. While some boomers simply don't want to downsize or move, others can't afford it or don't have any feasible options.

"Is it aging in place or is it stuck in place?" said Jennifer Molinsky, the director of Harvard University's Housing an Aging Society Program. "There's a lot of people in the middle, homeowners included, who are stuck."

Molinsky authored a report last year finding that the US didn't have anywhere near enough housing and care services for boomers as they age.

Homeowners who oppose new and denser housing in their neighborhoods are a major reason so many American communities are short on homes. Those who oppose building are disproportionately older homeowners. While boomers didn't create many of these not-in-my-backyard laws that restrict housing construction, in many cases, they've protected such regulations, dominating the attendance at community board meetings and fighting housing projects.

Boomers are struggling to find accessible, affordable homes amid rising costs

As people age, they tend to need more accessible homes with fewer stairs and wider hallways. As they stop driving, many also want to live in more walkable or transit-friendly places to access amenities and combat isolation.

But restrictive land-use laws, including those prohibiting apartment buildings in areas with single-family homes, have made accessible housing options harder to find in many of the communities boomers have called home for decades. Less than 4% of US homes have the three essential factors necessary for those with limited mobility: a single floor, wide hallways and doorways, and no steps to get in, the Harvard report found.

"There's just such a diversity of households that we're not really serving with the traditional single-family house," Molinsky said.

Many older homeowners — particularly the growing number who still have mortgages — are struggling with rising insurance premiums. Nationally, home-insurance premiums rose by an average of 21% from May 2022 to May 2023, Policygenius, an insurance marketplace, found. Insurance companies are increasingly dropping customers and pulling out of entire regions, particularly those hardest hit by climate-related disasters.

The Harvard report noted that places retirees had flocked to in recent decades like South Florida and Arizona also face some of the most severe climate-related impacts, including regular flooding, fires, and extreme heat.

A record number of homeowners 65 and older are cost-burdened, meaning they spend more than 30% of their income on housing and utilities, the report found. This is particularly difficult for those on fixed incomes. As a result, older people are increasingly facing homelessness. Single adults 50 or older are now estimated to account for about half of the US homeless population, up from about 10% three decades ago.

Not all boomers have benefited from the spike in housing prices and home equity. Wealth among boomers is very unevenly distributed, including when it comes to housing. Older renters and homeowners of color tend to have much higher housing costs. Molinsky's report found older Black homeowners had less than half the home equity of older white homeowners.

Molinsky said the shortage of homes appropriate for aging would hurt lower- and middle-income boomers and boomers of color the hardest.

"All of these things become much more pressing over the next few years when baby boomers turn 80," Molinsky said. "There's really no time to waste."

Are you struggling to downsize or find a suitable home to retire in? Are you otherwise affected by the cost of retirement housing? Reach out to this reporter at [email protected].