Note: This piece was originally featured in the February 2026 edition of MortgagePoint magazine.
Seniors have been faced with the twin challenges of rising housing costs and living on a fixed income for decades. However, the issue has become even more critical over the last few years due to stagnating senior incomes. There have been some small cost-of-living increases in Social Security payments, though Medicare deductions have risen as well.
Some are still paying off a mortgage even after retiring. According to the Harvard University Joint Center for Housing Studies (JCHS), older owners with mortgages are more likely to face affordability challenges than those who own a home free and clear. Forty-three percent of older owners with mortgages are cost burdened (spending from 30 to 50% of their monthly income on housing), compared to 19% of those who own without a mortgage.
Even if seniors stay in single-family residences after paying off the mortgage, they are faced with rising property taxes and, particularly in the last few years, rising insurance costs. American homeowners’ insurance premiums increased by an average ofn 24% over the past three years, according to the Consumer Federation of America. Nationally, CFA found homeowners saw their insurance premiums rise twice as fast as inflation between 2021 and 2024, which amounts to a $21 billion total price hike for Americans.
Property taxes have increased as well, by an average of 12% between 2021 and 2023, lifting the average annual tax bill to $4,380, according to the American Community Survey. Some state and local governments have implemented tax abatement programs, typically targeted to low-income and older adult households.
The cost of senior rental housing has also been on the rise. According to Multi-Housing News, the average asking rent for senior housing in the fourth quarter exceeded $5,700, a 4.4% year-over-year increase— the fourth consecutive quarter of rate deceleration from its peak of 6.2% in then second quarter of 2023. Over the past seven quarters, annual rent changes have ranged from 4-4.5%, above the pre-pandemic norm of 3-3.5%. According to the Urban Institute, renter households are more likely than owners to be cost-burdened at all ages. Older seniors, those 75 and older, are more likely to be cost-burdened than younger seniors. The costs of utilities, home repairs, and other items have risen as well, impacting senior homeowners and renters.
“Older households increasingly need support affording their housing, as well as the services they may need to remain in their homes,” notes Jennifer Molinsky, Director of the Housing an Aging Society Program, in a JCHS blog. “Yet need already outstrips available assistance. Federal rental assistance is underfunded for very low income older adults: at last measure in 2021, of the older adults earning no more than 50% of the area median income and thus qualifying for federal rental assistance, only 36.5%. The majority of the unassisted households were severely cost burdened, lived in severely substandard conditions, or both.”
The impact of these changes can be seen in some of the retirement communities that many seniors aspired to, but which have become too expensive, as noted in a recent Wall Street Journal article.
“We’re seeing fewer buyers in Florida, especially, as more of the state is vulnerable to extreme weather and luxury development takes priority over what most seniors can afford. Texas isn’t much better, but these two states were so popular because they’re warm and don’t have income tax,” said Ryan Dossey, Co-Founder of SoldFast. “A lot of our clients were small landlords with a handful of properties, offloading rentals as they get ready to retire, but we’re seeing a dip in interest as more choose to keep the supplemental income,” Dossey added. “This is more common up in Midwestern metros like Des Moines, Cleveland, Indianapolis, and Cincinnati because they held onto more of their older, smaller housing stock.”
“One of the biggest challenges that the entire industry is facing is construction costs,” said Tom Mann, VP of Sales and Marketing at Moorings Park Communities. “Construction costs have soared over the last five years. There’s plenty of demand [for senior housing]. The challenge is to be able to build something that people can afford.”
Mann added that Moorings Park serves the wealthiest 10% of seniors, so affordability hasn’t been an issue with the company.
Solutions Are Few
There is no easy answer to how seniors can keep pace with the rising cost of housing. Seniors looking to move to more affordable areas face the same challenges as buyers and renters in other age groups, according to Dossey. Some recommend renting out unused space, such as any rooms no longer occupied by children. Others suggest adding an accessory dwelling unit (ADU)—a secondary housing unit built on a single-family residential lot—onto the current property or moving into an ADU elsewhere.
The ADU market is projected to grow at a compound annual growth rate (CAGR) of 18.6% through 2030, according to a blog by The Realty School.
“Our operators have renovated and sold properties with ADUs recently, and I could definitely see that as a growing trend as healthcare and retirement community costs price out more seniors,” Dossey said. “They can live close to family for support, and smaller units are a little easier to make aging-ready.”
In addition to the challenges of senior housing, ADUs are growing as more communities either begin to allow them or permit growth in the number of allowed ADUs. The sentiment in various city council meetings towards ADUs is increasingly positive. A ReZone blog that outlines the growth of different types of ADUs outlines several trends:
- Tier 1 (Emerging & Discretionary): ADUs are gaining acceptance but are still largely approved by a caseby-case process through variances and special use permits. Typically, these cities are in the Midwest or East Coast.
- Tier 2 (Mature & Permissive): Cities that have already undergone comprehensive, citywide reform, resulting in highly permissive, by-right regulatory frameworks. Typically, these cities are in CA, AZ, CO, and all other states with statewide ADU reforms.
- Tier 3 (Contested & Evolving): Cities where the ADU policy framework is in flux due to political backlash or competing policy priorities. These markets present the highest degree of regulatory risk. The cities in this category seem to have no geographical relation.
The city of Chicago recently announced that it is expanding ADU access beginning April 1, under an ordinance approved in the fall, building on one originally passed at the beginning of the decade. According to the city, ADUs were common in Chicago throughout the first half of the 20th century, but their construction was prohibited starting in 1957 due to changes in the zoning ordinance that added parking requirements and banned secondary residential structures on Chicago lots.
The updated ADU ordinance allows for the creation of new units for homeowners needing extra income or those who wish to create separate spaces for multi-generational families. It also provides a path for the legalization of units that were previously built without zoning approval and building permits.
“We very often build ADUs for seniors or homeowners nearing retirement that want to age in place, either on their own property to rent out the primary home to generate rental income, or on their kid’s property to stay close to family,” said Whitney Hill, CEO and Co-Founder of Snap ADU.
With senior living costs climbing and housing availability shrinking, ADUs can be a smart choice, Hill adds. “Additionally, by building a new ADU, we are able to customize and add features for easy accessibility. This can include single-level layouts, open floor plans, wider doorways, grab bars, and zero-entry showers.”
Compared to a nursing home, building an ADU can be less expensive in the long run, according to Hill. For instance, the average nursing home in our market of San Diego costs about $9,500 a month, according to RetirementLiving. How does this compare to an ADU? A typical one-bedroom, one-bathroom ADU will generally cost $300,000 for the entirety of the build (including design, permitting, and construction), and an average design, permit, and build process takes about a year. At that rate, the costs of an ADU and a nursing home become roughly equal after just two and a half years. However, the ADU becomes a long-term asset and not an expense.
Renting out an Owned Home According to the latest data from the American Community Survey, more than 75% of senior households live alone or with only one other person, yet 60% of these households live in homes with at least three bedrooms. These homes may not only be too big—they might be too old or in poor condition. Nearly half of the large homes rented and owned by seniors were built before 1980 and might require serious renovation or modification. However, senior homeowners may not want to or may not be able to fulfill the responsibilities of a landlord.
Policy Changes
To reduce housing costs and ensure that seniors can stay in their homes if costs increase, the Urban Institute offers the following recommendations for federal, state, and local policymakers:
- Consider property tax deferrals at the local level to help seniors defray rising tax burdens
- Allow state-issued Medicaid waivers to cover housing supports, like emergency rental assistance
- Subsidize insurance costs for lowand fixed-income households, appropriately regulate the private insurance industry, and improve the data used to quantify climate risk
- Expand subsidized and income-restricted rental housing targeted to older adults, particularly in highcost markets where fixed incomes are quickly outpaced by rent growth
- Enact stronger tenant protections and eviction prevention: Policies that reduce eviction risk, limit sudden rent spikes, and provide legal and financial assistance can play a critical role in housing stability for older renters
- Preserve existing affordable housing: Preventing the loss of naturally occurring affordable units is often faster and more cost-effective than new construction
- Fund more Section 8 housing vouchers to help seniors with low incomes who rent stay in their homes
- Expand the number of subsidized units to address supply shortages at the affordable end of the market
- Allow Medicare to cover the cost of home modifications seniors need for changing health and mobility
- Simplify and introduce more lowcost options of the Home Equity Conversion Mortgage program the Federal Housing Administration offers to allow seniors to draw from their home equity
- Leverage state-based affordable housing preservation initiatives and funding to support preservation and rehabilitation of homes in poor condition
Seeking Senior Solutions
While policy shifts and emerging trends like ADUs offer a glimmer of hope, the “silver tsunami” of housing remains a looming storm. The challenge is no longer a distant concern for the next generation; according to the Urban Institute, the number of seniors will outnumber children within the next decade, marking a permanent demographic shift in the American landscape.
Addressing this crisis requires more than just incremental changes; it demands a fundamental rethinking of how we value and house our aging population. Whether through the wealthy enclaves of Florida or the resilient neighborhoods of the Midwest, the goal remains the same: ensuring that a lifetime of work isn’t erased by a single year of rising premiums or a sudden tax hike. For the millions of seniors caught between a fixed income and a fluid market, the stability of home is not just a financial asset. It is the cornerstone of dignity in their final chapters.
The full February issue can be found here.
