Baby boomer homeowners are sitting on a ton of equity right now. According to the Federal Reserve, they hold $17.3 trillion in home equity, roughly 50% of the country’s total equity. This is in large part due to so many of them — 83% of homeowners with a fixed-rate mortgage — having let their property build equity over time.
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Unfortunately, many boomers are facing a new problem, and that’s the current U.S. housing market. As of quarter two of 2025, the average home sold for over $512,000. According to a 2022 Redfin report, nearly 30% of all “large homes” (those with at least three bedrooms) belong to empty-nest boomers.
Between high housing prices and a lack of smaller, more accessible homes to downsize to, many boomers are aging in place. For those who might have wanted to move to a more manageable home or somewhere less expensive altogether — a common drive for retirees on fixed incomes — it’s just not feasible.
So, how can boomers manage this new retirement problem? How can this generation find affordable housing, and what should they consider when making the plunge?
Here are a few things boomers should keep in mind when looking for affordable housing.
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Finding Affordable Housing Is Tough
It’s no secret that finding affordable housing is a serious problem, and not just for boomers.
“Finding affordable housing is very daunting right now — many real estate markets are still running hot. While inflation has cooled, prices are still high. Property taxes in many states are increasing and the cost of insurance is also on the rise,” said Christine Coley, certified financial planner and wealth advisor at SteelPeak Wealth.
“A lot of people, of all ages, are seeing drastic increases in the mortgage payment due to increases in property tax and the cost of insurance,” Coley continued. “Homes they could comfortably afford are now moving out of reach with these increased costs. In areas where real estate has surged, people who own their home or are still making payments are having trouble keeping up with the increase to taxes and insurance.”
For fixed-income boomers who’ve paid off their mortgage, property taxes and insurance are serious financial concerns. The average cost of property taxes is $1,815, while typical homeowners’ insurance runs about $1,754 a year. Larger, more expensive homes tend to have higher taxes and premiums.
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Consider Taxation
Affordable housing is still out there. It just might be harder to find. Boomers who are considering making the move from their current house to a smaller or more manageable one, or even to a different state, should start by asking themselves a few questions.
“Things to consider when looking for a home or possibly a new state to move to as every state’s laws vary widely when it comes to taxes for retirees,” said Coley. “Does your state have [a] personal state income tax? Is there property tax relief for retirees, or disabled veterans? Does this state tax your Social Security benefits?”
Also, find out how the state taxes retirement income. It can vary based on the type of income, but taxation can cut into any retiree’s household budget, so knowing at least the basics is essential.
“Some states are much more tax-friendly to retirees,” said Coley. “For example, Florida, Nevada and Wyoming often make the list for being tax-friendly in retirement. A good advisor or CPA can assist with these decisions.”
Consider Home Sizes and Accessibility
Although some boomer retirees are on the fence about keeping their larger home or even moving into a bigger one, Coley suggested going with a smaller house for several reasons.
“First, your children and grandchildren don’t care how big your house is. They will still come to visit, and you will find a way to make it work. Family can stay in a hotel, or you can all rent a larger place for the holidays, which is a one-time [expense] versus an ongoing larger commitment to a home that is too big,” she said.
“Second, a larger house isn’t just more expensive to buy, insure and pay taxes on — it’s a lot of work to maintain,” she continued. “Even just weekly cleaning can be daunting and any home with stairs can be difficult to navigate as you age.”
Factor Inflation Into the Equation
Inflation is also a very real issue that needs to be factored in. After all, it can significantly impact retirees’ incomes.
“While inflation has gone down, keep in mind that this means prices aren’t growing as fast. It does not mean prices are going down,” said Coley. “It’s important to work with a planner and create a housing budget that factors in inflation rates for all your expenses over time.”
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This article originally appeared on GOBankingRates.com: The New Retirement Problem Boomers Are Facing
