A new worry for people getting divorced after 50? Where to live in a tight housing market.

By Alessandra Malito

'Gray divorces' are pushing older Americans into a heated housing market

As record numbers of older Americans reach a variety of milestones -there are more people turning 65 this year than ever before, for example - many of them are also divorcing.

The housing market may not be ready.

This year marks the beginning of what's known as Peak 65, the largest-ever wave of people celebrating their 65th birthday. This comes at a time when more older couples are splitting up, home prices have skyrocketed and mortgage rates are hovering near their highest levels since the early 2000s.

"I'm finding a lot more people are coming to the decision they have to sell the house," said Mary Salisbury, a certified divorce financial analyst and founder of the North Carolina-based Right Divorce Solution. "People generally, they decide to sell the home, try to find a small home or a townhouse, so they're taking the opportunity to downsize. But then there's always that group of people who ... when they sell the home, neither of them have enough cash to buy a home again."

Household shake-ups are nothing new to the baby boom generation. And there's a rising trend of divorces among people 65 and older, with the number tripling between 1990 and 2021, according to a report from Bowling Green State University's National Center for Family and Marriage Research. As that trend dovetails with Peak 65, it will affect things like how people navigate long-term care, whether and how different generations of families live together, the pressures on financial systems such as Social Security - and the cost of housing.

The housing market

In some instances, first-time homebuyers are competing with baby boomers for the same homes, said Brandi Snowden, director of member- and consumer-survey research at the National Association of Realtors. And older people, even after a divorce, often had the upper hand in 2023, she said: A majority of them were repeat homebuyers, and many also had home equity to use to their advantage.

Buyers are facing a tight housing market, with "limited housing inventory and affordability constraints," according to a 2023 NAR report on home buyers and sellers.

In 2023, baby-boomer home buyers edged out millennials, who had previously been the top buying group. The majority of those boomers were still married, the NAR report found, but single women and single men in the "older baby boomer" category represented higher shares of buyers than in years past. Older baby boomers were defined as those ages 68 to 76, while younger baby boomers were between 58 and 67. The primary reason buyers gave for purchasing a home was a change in family circumstances, though the report didn't specify what those changes were.

Many of these home buyers were purchasing single-family homes, although the oldest individuals were more likely to purchase a condominium or move to some type of senior housing. Older buyers were also more likely to move the farthest distances, the report found.

But high home prices are only part of the problem for buyers. Mortgage rates, hovering at more than 7% recently, present another barrier.

Where 'gray divorcees' go

What's precipitating this wave of "gray divorces"? For some people, it's simply longevity and a desire for a new life on their own terms.

"There is such a change around the stigma around divorce," said Tracy Dalgleish, a couples therapist and author of the 2023 book "I Didn't Sign Up for This: A Couples Therapist Shares Real-Life Stories of Breaking Patterns and Finding Joy in Relationships ... Including Her Own."

"So many more people are saying, actually, 'I only have one life to live, I no longer accept this about my partner,'" she said.

In gray divorces specifically, many couples may have stayed together for their children, Dalgleish said. "The kids get older, and they're kind of like, 'What are we doing together? We've done our main job of raising kids.'"

A divorce can put older people in a tough spot when it comes to where to live. High housing costs force many couples who haven't planned well financially to relocate, or to rent instead of buying, Salisbury said. They might also find themselves moving in with a roommate, sharing a mortgage with their former spouse or asking their children for help. "Because mortgage [rates were] so low, they were just used to a certain lifestyle because they had extra discretionary income," she said.

Jacqueline Harounian, a partner at law firm Wisselman, Harounian & Associations in Long Island, N.Y., often encourages older couples to consult with financial advisers who can help them create a budget and make sense of their retirement savings and income plans. Although some older couples may have had children later in life, most children are out of the home or at least in college in the case of gray divorces, so the main priorities for settlements, she said, fall into two categories: the house and retirement.

Selling a family home can be difficult for any couple splitting up, but older people might have an especially strong attachment if they spent decades in the home.

"In any divorce, it can be an emotional process," Harounian said. "Older people are attached to their homes. They have possessions. It can be a very difficult decision to sell a home, but oftentimes it is the best decision to make, especially in a market like now, where it is a seller's market. There are buyers out there, and when couples cooperate together, they really come out ahead."

She added: "Once they make that decision, they can solve a lot of problems, and can comfortably fund the next chapter."

Some couples, on the other hand, are choosing to separate everything but their living quarters. They may decide to stay in the same house but live on different floors, with one spouse in the basement and the other upstairs, Dalgleish said. "That's where they are not able to sell the home and live separately," she added.

Some couples who decide to keep their home may set up an arrangement where one spouse lives in the house but both continue to pay toward the mortgage, Salisbury said. "I am finding more people are keeping mortgages in place and letting one spouse live there. [It] is the only way it is affordable," she said.

That can easily get complicated, raising questions such as who will pay for what type of maintenance in the home, and how to split the value when selling. Couples must also ensure they have the proper titling on the home so that there are no estate issues in the event of one spouse's death. (States have their own rules around home titling. With tenants in the entirety, when one of the owners dies, the other gets full control; with tenants in common, when one owner dies, the other person retains 50% of the property.)

"As a certified divorce analyst, we always discourage that after a divorce," she said.

Other people may move in with family or friends while they figure out what to do next. The number of people 65 and older who move in with a roommate has grown at a rate of 525% over the past 10 years, according to SpareRoom, a search engine for roommates.

Salisbury said she's seen adult children help their parents pay their mortgage, too.

In some instances, people didn't - or couldn't afford to - plan well enough for their retirements, and so they had to rent instead of buying another place after a divorce, Salisbury said. "I'm finding with a lot of divorcing couples, they haven't planned well," she said. "They're looking at renting, and a lot of them have to relocate to places that were not their dreams because of the cost of housing."

-Alessandra Malito

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03-18-24 1135ET

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