The story of Tom and Jeanne Skellan represents a growing trend among retirees who are making unconventional housing choices in today’s complex real estate landscape. After more than four decades as homeowners, this semi-retired couple made the strategic decision to sell their Utah home and become renters in Arizona, despite having sufficient funds from their home sale for a down payment. Their choice reflects a fundamental shift in how older Americans approach housing decisions, particularly in an environment of elevated mortgage rates and soaring home prices. The Skellans’ $3,300 monthly Social Security income, combined with Tom’s pension and semi-retired business income, provides them financial flexibility that many retirees envy, yet they consciously chose renting for its practical benefits rather than financial necessity.
Current market conditions have created a perfect storm that makes renting increasingly attractive for retirees. With 30-year fixed mortgage rates hovering around 7% and home prices at historic highs in many markets, the math of homeownership has fundamentally changed for older Americans. The traditional wisdom of ‘always buy’ is being challenged by financial realities that make renting not just a lifestyle choice but often a smarter financial decision. For retirees on fixed incomes, locking into a high-rate mortgage could strain their retirement savings, while renting provides predictable monthly costs without the hidden expenses of home maintenance and repairs that can devastate retirement budgets.
The flexibility that renting provides cannot be overstated for retirees considering their housing options. Unlike homeowners who face significant transaction costs and market timing risks when selling, renters can adapt more easily to changing family needs, health considerations, or simply desire for new experiences. The Skellans specifically mentioned the ability to move if their son relocates or if they want a change of scenery—a flexibility that becomes increasingly valuable as mobility and health considerations evolve with age. This mobility advantage is particularly crucial in today’s volatile housing market where selling a home can take months and involve substantial closing costs.
Financial considerations extend beyond just mortgage payments when evaluating the rent versus buy decision. Homeowners face property taxes that typically increase annually, homeowners insurance premiums that have been rising dramatically in many regions, and maintenance costs that average 1-4% of home value annually. For retirees, these unpredictable expenses can create budget uncertainty that renting eliminates. The Skellans pay $2,100 monthly rent—slightly more than their previous mortgage—but they’ve eliminated yard work, HVAC repairs, and worry about rising property taxes, creating both financial predictability and lifestyle benefits.
The time horizon consideration that Tom Skellan mentioned—’I’m not going to last 30 years’—highlights a crucial financial reality many retirees face. Traditional mortgage amortization assumes a 30-year payoff period, but retirees may not live long enough to benefit from full equity buildup or may need to access their home equity through reverse mortgages or sales. With current high home prices and mortgage rates, the break-even point for buying versus renting has extended significantly, making it difficult for older homeowners to recoup their investment in the shorter timeframes typical of retirement planning.
Market data supports the Skellans’ experience, showing a nearly 30% increase in renters aged 65 or older between 2013-2023, reaching approximately 10.4 million Americans. This trend is particularly pronounced in Sunbelt destinations like Arizona, where retirement communities and 55+ rental properties are experiencing unprecedented growth. The demographic shift reflects both choice and necessity, as some retirees strategically choose renting while others find themselves priced out of homeownership markets. Understanding these market dynamics helps explain why rental communities have become ‘a really hot part of the senior housing market’ according to industry experts.
The challenges of downsizing as homeowners have never been more pronounced than in today’s market environment. Many retirees seeking smaller, more manageable homes face inventory shortages in the starter home category, competition from younger buyers, and the financial reality that ‘rightsizing’ often doesn’t produce the financial windfall it once did. With mortgage rates high and housing costs elevated, many older Americans are finding that the traditional path of selling a larger home to buy a smaller one doesn’t work mathematically, leading them to rental options that provide appropriate housing without the financial strain.
Not all older renters share the Skellans’ financial comfort, however. Harvard’s Joint Center for Housing Studies reports that about one-third of households aged 65+ were cost-burdened in 2023, spending more than 30% of income on housing. The situation is particularly dire for older renters, with 58% experiencing cost burdens—most of them severe. This disparity highlights the two-tier reality of retirement housing: those who choose renting for lifestyle reasons and those who rent because homeownership is financially out of reach. Understanding this distinction is crucial for policymakers and housing professionals addressing senior housing needs.
The rise of specialized rental communities for older adults represents a significant evolution in retirement housing options. These communities often provide amenities specifically designed for older residents, including single-level living, accessibility features, social programming, and maintenance-free lifestyles. Unlike traditional apartments, these properties understand the unique needs of older renters and create environments that support aging in place comfortably. For retirees considering their options, these specialized communities can offer the best of both worlds: the flexibility of renting with the community and amenities typically associated with ownership in age-restricted developments.
From an investment perspective, the growth in older renters presents opportunities and challenges for real estate investors and developers. The demand for rental properties suitable for older adults is creating new market segments and investment thesis opportunities. Properties with single-level layouts, accessibility features, and proximity to healthcare facilities are particularly well-positioned to benefit from this demographic trend. However, developers must also consider affordability constraints that affect many older renters, balancing amenity packages with rental rates that remain accessible to retirees on fixed incomes.
For financial planners and advisors working with retirees, the rent versus buy decision requires sophisticated analysis that goes beyond simple payment comparisons. Advisors must consider clients’ entire financial picture, including retirement income streams, healthcare costs, longevity expectations, and estate planning goals. The decision also involves qualitative factors like desired lifestyle, family proximity, and mobility considerations. Tools that model various housing scenarios—comparing the opportunity cost of invested home equity versus rental payments—can help retirees make informed decisions aligned with their overall retirement strategy.
Practical advice for retirees considering their housing options starts with comprehensive financial modeling that compares all costs of ownership versus renting over their anticipated time horizon. Consider working with a financial advisor to model scenarios including invested equity returns, tax implications, and potential healthcare costs. Visit properties in person to evaluate accessibility features and community amenities. Negotiate lease terms that provide stability—many landlords will offer multi-year leases to qualified tenants. Finally, maintain an emergency fund equivalent to 3-6 months’ rent to ensure housing security regardless of market conditions or personal circumstances.
