Perspectives Blog
February 29, 2024
No Imminent Demographic-Driven Supply Boost Expected
Douglas Duncan
Senior Vice President and Chief Economist
Rachel Zimmerman
Market Research Advisor, National Housing Survey Lead
Older homeowners aged 60-plus years like their homes, many view the equity in those homes as a financial reserve, and a significant share are confident of their overall retirement financial plan and expect to age in place. Importantly, the homeownership rate among this age group is nearly 80%.1 The timing of the potential transition of this cohort away from homeownership has increasingly been a focus of industry stakeholders, particularly given the historically low level of existing home supply.
In 2022, Americans aged 60-plus represented 29% of the adult population and 44% of homeowners. In the next decade, the 60-plus population is forecast by the Census Bureau to increase to 32% of the total adult population. If household formation and ownership rates remain unchanged from 2022 levels, the change in population levels alone would mean the 60-plus population could approach nearly half of all homeowners in the next decade.2
Given the size of this homeowner segment, we thought it was important to better understand their financial plans – and housing's role in those plans – to determine how that might impact future housing market dynamics.
In April 2023, we conducted a research study of a nationally representative group of 1,141 homeowners aged 60-plus.3 Approximately two-thirds were already retired, and, of those still working, a majority planned to retire in the next five years. All were asked about their financial plan for retirement and the role they expect their home to play in that retirement. An additional group of 307 older homeowners with lower incomes and lower amounts of retirement assets and savings were also surveyed to understand the differences in attitudes and needs among older homeowners facing greater financial constraints.4 Prior to fielding the survey, we also conducted in-depth interviews with 25 older homeowners to gain deeper insight into their motivations and attitudes, and to better inform the survey work. The details and methodology of our survey, as well as the data and findings, can be found in the research deck.
Key Insights
Our research study identified several important insights for older homeowners (unless otherwise noted, percentages are from the nationally representative sample), including:
- Older homeowners are confident in their retirement planning: 72% were confident they will have enough income during their retirement, and that confidence grew with age. Economically disadvantaged homeowners were less confident, at 55%.
- Most are not interested in using their home equity as retirement income: Only 15% said that they would consider using their home's equity for extra funds needed during retirement, and economically disadvantaged owners felt similarly.
- A majority plan to age in place: 56% said they will never sell; 27% said they might sell at some point; and only 17% said they have already sold or plan to sell their home. The retired older adults who sold their homes said they did so for a variety of reasons, including moving to a home that better fits their needs, financial reasons (e.g., lower taxes, lower cost housing), living closer to family/friends, and living in a warmer climate.
- Many report feeling an emotional and financial “lock-in” effect: Older homeowners' disinclination to move is tied to the love of their home, pride in debt elimination (especially their mortgage), community engagement, and access to known services.
- Although generally averse to debt, there is modest interest in using loan products for home improvement, and nearly half would be interested in a home-maintenance/repair service designed for retirees at a lower cost: 26% expressed interest in a home improvement loan, and 48% were interested in a home-maintenance/repair service at a lower cost, representing the largest interest across programs and services.
- Over one-third are open to retirement advice: 38% said they were open to receiving advice; and the younger the homeowner, the more open they are to receiving retirement advice (43% of those under age 65vs. 33% of those over age 80).
As outlined below, these insights have broader implications for the overall housing market, including the potential availability of homes for sale, the maintenance of an aging housing supply, home equity product interest, and necessary retirement services.
Detailed Findings
Confidence in Retirement Planning
Many older homeowners felt prepared for retirement and thought they had planned enough to live comfortably and within their means during retirement. Survey results show 72% of older homeowners felt confident they will have enough income during retirement, and close to 60% agreed they had "done a lot of research and planned quite well for retirement."
Within the cohort, there was an age progression to these questions, with older homeowners (ages 70-plus) more confident that they have planned well compared to younger homeowners (ages 60-69). Over 60% of older homeowners wished they had saved more for retirement when they were younger, and significantly more mortgage holders (68%) than outright owners (56%) wished they had saved more for retirement. Over one-third of older homeowners were also open to receiving financial advice for retirement.
Here, too, there was an age progression within the cohort, with younger homeowners more open to receiving advice than older homeowners.
Qualitative interviews shed additional light on these findings. Many older homeowners who were interviewed indicated that they do not have extravagant wants or needs and prefer to live simply and frugally to keep their expenses in line with their incomes. Additionally, many were open to receiving information they may not have come across when doing their own retirement research.
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Research Deck
I Feel Confident I Have (or Will Have) Enough Monthly Income To Live Comfortably During Retirement
By Sample, Homeowner Status, and Age
Breakouts by Homeowner Status and Age based on Nationally Representative Sample: N = 1,141
Click image above for larger view
Note: Respondents were allowed to skip some questions on the online survey and answer with "don’t know" or "refuse to answer" on the phone survey. A very small percentage of respondents chose these options. Not all charts sum to 100% due to rounding or because the "don't know," "refused to answer," and skipped responses are not shown.
Q18B: Please indicate whether you agree or disagree with the following statements: I feel confident I have (or will have) enough monthly income to live comfortably during retirement.
R/O, M/OU, A/B/C/D/E=Significantly Higher vs. other audience at 95% C.L.
I Have Done A Lot of Research and Planned Quite Well for My Retirement
By Sample, Homeowner Status, and Age
Breakouts by Homeowner Status and Age based on Nationally Representative Sample: N = 1,141
Click image above for larger view
Note: Not all charts sum to 100% due to rounding or because don’t know/refused to answer/skipped responses are not shown.
Q17C: Please indicate whether you agree or disagree with the following statements on retirement planning: I have done a lot of research and planned quite well for my retirement: R/O, M/OU, A/B/C/D/E=Significantly Higher vs. other audience at 95% C.L.
Retirement Support
Ranked by Total Agree
Nationally Representative Sample: N = 1,141
Click image above for larger view
Note: Not all charts sum to 100% due to rounding or because don’t know/refused to answer/skipped responses are not shown.
Q18: Please indicate whether you agree or disagree with the following statements.
Q17: Please indicate whether you agree or disagree with the following statements on retirement planning.
Not Much Interest in Home Financing Products for Additional Retirement Income
Only 15% of older homeowners said they would consider using their home's equity for additional funds during retirement; another 43% said maybe; and 41% said they would not consider using their home's equity. The economically disadvantaged group answered similarly. For both groups, the top reasons for not using their home's equity included: 1) not needing extra funds during retirement; and 2) not wanting to owe the bank anything and/or wanting to own their home free and clear.
When asked about the likelihood of using specific home financing products or strategies to generate additional cash or income during retirement, a majority indicated they were not likely to use any, but a few options were of more interest than others. "Selling your home" was the most likely action respondents said they would take to generate additional cash/income (33%), followed by taking out "a small lump sum of equity that could be repaid" (31%), a home improvement loan (26%), or a home equity loan of credit (25%).
Little interest was shown in taking out a reverse mortgage or renting out a room.
Would You Consider Using Your Home’s Equity for Additional Funds?
Nationally Representative Sample: N = 1,141, Economically Disadvantaged Sample: N = 307
Click image above for larger view
Note: Not all charts sum to 100% due to rounding or because don’t know/refused to answer/skipped responses are not shown.
Q53: Would you consider using your home’s equity to provide extra funds needed during retirement? For example, selling your home, or getting a home equity line of credit?
Reasons for Not Using Home Equity
Asked of those who said they would not use their home’s equity to provide additional funds
Nationally Representative Sample: N = 464, Economically Disadvantaged Sample: N = 132
Click image above for larger view
Note: Not all charts sum to 100% due to rounding or because don’t know/refused to answer/skipped responses are not shown.
Q54: What is the primary reason you would not consider using your home’s equity to provide extra funds during retirement?
R/O=Significantly Higher vs. other audience at 95% C.L.
Most Older Homeowners Expect to Age in Place
Only 17% of older homeowners said they sold their home, or plan to, during retirement (8% already sold, and 9% plan to sell); another 27% said they may sell; and 56% said they will never sell. Respondents offered a compelling combination of emotional and financial reasons for remaining in their homes, including a "love" of their home, comfort with the area, and that their "home is, or almost is, paid off." The top reasons for staying in their homes did not differ by age group (younger vs. older), but potential future research might explore whether intergenerational households are becoming a more prominent reason for some retirees to stay in their homes.
Only 7% of older homeowners said the process would be "too difficult" to sell their home, so that does not appear to be a barrier for many homeowners. Additionally, 62% said that their goal is to leave their home to their heirs, which may indicate that many view their homes as part of their legacy, another emotional and financial reason to stay in their home. Almost half said their home's equity provides security for costs associated with unexpected emergencies, which, while not explicitly defined by the survey, could be anything from extensive healthcare costs to assisted living or major home repairs.
Amid the larger discussion of mortgaged homeowners being "locked in" to their homes following the post-pandemic jump in mortgage rates, a previously published survey of ours on the "lock-in effect" found that, for homeowners of all ages, households cited a number of non-monetary reasons for planning to remain in their homes longer. These latest survey results corroborate those findings, and they may be especially true for older homeowners, many of whom cited the same non-financial reasons for wanting to stay in their homes longer.
Plans To Sell Your Home
Nationally Representative Sample: N = 1,141
Click image above for larger view
Note: Not all charts sum to 100% due to rounding or because don’t know/refused to answer/skipped responses are not shown.
Distribution derived from all three questions below:
Q21: Since retiring, have you sold your primary residence?
Q27: At some point during retirement, do you plan to sell your current home?
Q28: When you retire, do you plan to sell your home?
Attitude Towards Your Home
Nationally Representative Sample: N = 1,141
Click image above for larger view
Note: Not all charts sum to 100% due to rounding or because don’t know/refused to answer/skipped responses are not shown.
Q19: Please indicate whether you agree or disagree with the following statements on homeownership.
What Are the Top 3 Reasons Why You Plan To Stay in Your Home Throughout Retirement?
Older homeowners who do not intend to move in retirement
Nationally Representative Sample: N = 637
Click image above for larger view
Note: Not all charts sum to 100% due to rounding or because don’t know/refused to answer/skipped responses are not shown.
Q36: What are the top 3 reasons why you plan to stay in your home throughout retirement?
They're Concerned about Inflation, Healthcare Costs, and Assisted Living Costs
Older homeowners expressed the most concern over inflation and the financial and health issues related to getting older. The rising cost of assisted living, coupled with inflation, may be contributing to older homeowners' preference to age in place, since doing so may enable them to better control costs. Already having familiarity with their community and the needs of their home, it's likely they have a strong understanding of their current expenses, including how to maintain or reduce them, if necessary.
Respondents were not asked about their current healthcare programs and insurance (e.g., Medicare, company-sponsored healthcare program, long-term care insurance), but future research might explore how older adults are thinking about, or weighing, affording healthcare costs along with housing costs.
Concerns During Retirement
Nationally Representative Sample: N = 1,141
Click image above for larger view
Note: Not all charts sum to 100% due to rounding or because don’t know/refused to answer/skipped responses are not shown.
Q50: Please indicate how concerned you are about each of the following situations in your life during retirement.
Opportunities to Support Older Homeowners
Of the ideas presented in the survey to support older homeowners in retirement, respondents expressed the most interest in a maintenance service for retirees that makes home improvements and repairs at a lower cost.
Since many older homeowners are on fixed incomes and will likely have accessibility and/or basic maintenance needs as they age in place, interest in such a program makes sense. The connection between housing and health of the aging population has been highlighted in many industry reports;5 if older homeowners can have their homes meet their needs as they age, we believe it will likely have societal spillover effects. These might include allowing older homeowners more independence for a longer period of time, a reduction in the frequency of adverse events (e.g., falling or living in unhealthy conditions), and potentially reducing the cost to caretakers and the healthcare system.
Interest in Programs and Services Ideas
Ranked by Total Interested
Nationally Representative Sample: N = 1,141
Click image above for larger view
Note: Not all charts sum to 100% due to rounding or because don’t know/refused to answer/skipped responses are not shown.
Q57: How interested are you in programs or services regarding your home during retirement?
Wide-Ranging Implications
We think our survey findings have important implications for older homeowners, their families, and the entire housing market, including the supply of housing, home maintenance programs, and retirement advisory services. Since the research found that only 17% of older homeowners say they have sold or plan to sell their home during retirement – and many who sold their home just bought another home to fit their retirement needs – we believe older homeowners exiting their homes are unlikely to offer much near-term housing supply relief.
As older homeowners age along with their homes, helping them maintain their homes – from home improvement loan products to help with maintenance and repair services – could be supportive of their stated needs in our survey.
Providing cost-effective maintenance and repair programs would help sustain the value and safety of their homes, and potentially reduce unexpected housing-related emergency costs, for which, as a last resort, some homeowners may use their home equity. The research shows that almost half of older homeowners see their home equity as security for unexpected emergency costs. As mentioned previously, home improvement loans or programs could provide benefits on many fronts – including potentially lowering healthcare costs due to safer living conditions. There may also be a way to a better interface with home health care organizations as a strategy to lower or help maintain societal costs.
Even though most older homeowners expressed confidence in their retirement planning, providing objective advice to help them make informed financial choices about their homes earlier in retirement, or prior to retirement, may be another opportunity for the financial services industry. Our research found that over one-third of older homeowners, especially those under 70, are open to financial advice. With housing representing a sizable portion of many homeowners' net worth, we believe it's important that housing and home equity planning be included in holistic retirement planning.
In sum, while a majority of older homeowners feel capable of managing their retirement and income needs, and express little interest in using their home equity for income (with the exception of addressing emergencies), our research indicates areas of potential support for certain older homeowners who may need or benefit from it. Such support could be provided by various organizations within the housing and financial industries. Examples include lenders providing low-cost home improvement loans; home maintenance companies or local organizations/governments providing cost-effective maintenance programs; and retirement-planning advisors including housing/home equity planning in a holistic manner for older homeowners looking for advice. At Fannie Mae, we look forward to working with our industry partners to help support older adult homeowners, including by helping to shed light on their needs via continued research and insights.
Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group or survey respondents included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR Group represent the views of that group or survey respondents as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.
1 1-Year 2022 U.S. Census American Community Survey, total adult population based on 15-100-year olds.
2 1-Year 2022 U.S. Census American Community Survey, with projections based on Census Bureau 2023 National Population Projections.
3 The age group 60-plus was chosen because once someone reaches 60-years old, they may be thinking more in-depth about their retirement planning, including income needs and what to do with their home (one can withdraw 401K money at 59 ½ and start social security at age 62).
4 Incomes less than $35K if single, less than $50K if two-person household, financial assets (not including home equity) less than $100K if single, less than $300K if two-person household.
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