Baby Boomers like Marta and Octavian Dragos are finding themselves in a common predicament: feeling trapped in large homes once filled with family. As empty nesters over 70, the Dragos represent many in their generation struggling with the decision to downsize. Despite wanting to simplify their lives, financial and logistical hurdles make selling and moving harder so Baby Boomers are choosing to stay in their homes. High capital gains taxes on increased home values and the scarcity of smaller homes in familiar neighborhoods present tough challenges.

The financial implications of selling a long-time family home are daunting for many Boomers. Capital gains taxes can eat into the profits of a sale significantly, especially in states like California, where home values have skyrocketed. The tax exclusions set in the ’90s, though helpful, don’t fully align with today’s real estate values, making the prospect of paying hefty taxes on the sale discouraging. This issue has sparked legislative proposals aimed at easing the tax burden, but progress is slow, leaving many homeowners in a financial bind.

Furthermore, the lack of suitable downsizing options in their beloved communities adds to the dilemma. The concept of “missing middle” housing highlights the gap in available smaller homes that could accommodate aging Boomers looking to downsize without leaving their neighborhoods. Even when smaller homes are available, the cost savings are often minimal due to high market prices and additional fees. As a result, like the Dragos, many Baby Boomers are choosing to stay in their homes, contributing to the low inventory of homes for sale and exacerbating the housing market’s challenges. This blog sheds light on the complex factors Boomers face as they consider downsizing, underscoring the need for more flexible housing and tax solutions to support their transitions.