Economists usually see homes as either investments or places to live. But homes also mean a lot to people emotionally and personally – they provide a sense of security, comfort, and success. In our recent study, we look at how older people decide where to live, especially when they have health problems.

“Ageing in place” (AIP) means wanting to stay in your own home (or your partner’s home) until you have to leave. When choosing a home, people often don’t think about what they’ll need as they get older. They usually pick a place where they can live on their own, with some shared facilities. Changing from this standard is seen as a loss, which is why many people don’t want to move. If you prefer “aging in place,” it might mean you focus on the present and don’t plan for your future housing needs.

Aging in place can be good for your health because it gives you a sense of community and independence (Grabowski, 2006). Even though it’s common in many countries, we don’t fully understand why people decide to move, especially when unexpected things like health problems happen. Aging in place is possible because of support from the community, the right kind of housing, and help from family and friends. Housing is usually the biggest source of wealth for many people, and it’s especially important when house prices are going up. Some young people might not want to make big investments in homes because they’re not easy to sell.

Moving to a Smaller Place When You’re Older

Some studies show that even when people’s health gets worse and they need help, they still want to stay in their own homes. In Europe, people tend to move to smaller and less expensive homes when they get older. But there are two types of downsizing: getting a home with fewer rooms (physical downsizing) and getting a cheaper home (financial downsizing).

People make these decisions for three main reasons:

1. Too Much House: Older people often have more space than they need. As they get older, they use even more space, especially when they’re in their 60s and 70s (Clark and Duerloo, 2006). This means there’s less room for younger people who need bigger homes.
2. Saving for Later: People save money to use when they’re older. Since homes are a big part of what they own, older people might want to move or rent a smaller place to have more money for other things.
3. Other Life Reasons: Sometimes, people move or downsize because they want to leave something for their family or because their kids have moved out.

Health Problems Change What People Want in a Home

Health problems can make people want to downsize. Research from LSE explores whether health problems made people move to a smaller or cheaper home and whether they sold their homes to have more money for other things. The study looked at the impact of health problems on where people lived and their homes’ size. It also checked if health problems made people move.

The researchers used data from the Survey of Health, Ageing, and Retirement in Europe (SHARE), which followed people in nine countries for about ten years. They found that as people get older, they’re less likely to move, which supports the idea of aging in place. But when someone in their household has a health problem, this changes. So, aging in place depends on whether someone in the household has health issues. If people plan ahead and make their homes suitable for old age, they’re less likely to move.

When it comes to financial downsizing, the study found that the value of a person’s home compared to their total wealth drops by 8.9 percentage points after they or someone in their household has a mental health issue, and by 4.2 percentage points after a non-mental health problem. In these cases, the new home has fewer rooms. There are also big differences in downsizing between European countries. In Nordic countries, people meet all the downsizing definitions we looked at, but in Southern European countries, people tend to move to smaller but more valuable homes, often because they want to invest or leave something for their family.

What This Means for Policies

As people get older, they’re less likely to move, and aging in place is still a common choice in Europe. But health problems can change this. The chance of moving goes up when someone has a health problem, especially if they’re older. So, whether someone chooses aging in place depends on their health or their partner’s health. These results also vary a lot across European countries, showing that aging in place may be stronger in Southern Europe.

These findings have important implications for policies. In places where people still want to stay in their homes even after a health problem, we should focus on supporting the community and social connections they have. In contrast, in places where people prefer to downsize after a health problem, we should help them find smaller homes. This way, we can avoid or delay more expensive forms of care and better manage health problems.

Furthermore, encouraging older people to downsize can also free up larger homes for others, which can help with urban planning. By offering incentives for downsizing and providing more housing options for seniors, we can make it easier for younger people to find homes in crowded cities.