Boomer homeowners aren't as well off as you may think

• Over a third of older households were cost-burdened in 2023.
• As the population of Americans 80 and older mushrooms, their housing woes are intensifying.
• While renters are struggling the most, homeowners are also facing rising costs.

If you're a millennial or Gen Zer with a penchant for scrolling Zillow, you've probably found yourself envying the boomer homeowners whose home values have ballooned to prices you could never afford. 

But many aging households — both renters and homeowners — are struggling with rising housing costs. As the number of older Americans, particularly those in their 80s and older, grows, their housing woes are intensifying.

About a third of 65-and-older households were cost-burdened in 2023, meaning they spent more than 30% of their income on housing, according to a new report from Harvard's Joint Center for Housing Studies. More than half of those were severely cost-burdened, spending more than 50% of their income on housing.

Household incomes tend to decline as people enter their 80s, when many lose their partners and have to support themselves on a single income. That can make what's often their biggest monthly expense — housing costs — even more difficult to manage. With the oldest baby boomers on the cusp of turning 80, this dynamic is expected to put a lot of additional pressure on accessible housing, long-term care, and other services older people rely on.

"We're on the precipice of a pretty big shift in demand," said Jennifer Molinsky, the director of Harvard University's Housing and Aging Society Program. "The share of older adults 65-plus is going to tilt older, and I think a higher share will have cost burdens." 

Older renters are worse off than homeowners. A majority of them — 58% — were cost-burdened in 2023, most of them severely, the Harvard report found. But homeowners are also increasingly struggling. 

A growing share of older homeowners — 31% of those in their 80s, as of 2022 — are still saddled with mortgages, and 43% of them are cost-burdened. That's more than twice the share of those without mortgages, the report found. But even those who own their homes outright are still dealing with other ballooning housing costs, including insurance premiums, property taxes, utilities, and home repairs.

The number of older households financially strained by their housing has grown from just over 10 million in 2019 to more than 12.4 million in 2023. Meanwhile, home prices have soared over the last several years, mortgage interest rates are stubbornly high, and smaller, more affordable homes that could be suitable for aging empty-nesters looking to downsize are a shrinking slice of the pie. Just 9% of new homes built in 2023 were under 1,400 square feet.

This dynamic is undermining a long American tradition: treating homes as retirement nest eggs.

Many homeowners bank on selling their home, downsizing, and living off their sale profits in their older age. But the housing shortage also means that even many homeowners sitting on valuable home equity who want to cash in are having trouble finding somewhere to go.

"There just aren't that many smaller condos or apartments that are less expensive that you're going to be able to make that trade off and stay in your community," Molinsky said.