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Interest rates and lifestyle-driven moves for older adults: a vector autoregression analysis

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  • Daniel G. Lindberg

    (Marquette University - Department of Economics)

Abstract

We examine the impact of interest rates on lifestyle-driven moves by older adults into independent living properties. Older adults often downsize for low-maintenance, accessible, homes, desiring a lifestyle and amenities according to their stage in life. Placing such transitions in a macroeconomic context using a Vector Autoregression approach, we find that positive interest rate shocks dampen independent living occupancy rates for four to five years. Shocks to the multifamily price index, which controls for an alternative housing setting, have a shorter-run positive impact on independent living occupancy rates. The findings underscore the significance of housing market conditions and interest rates when evaluating housing needs for older adults. Because seniors are a politically influential demographic, frictions in housing transitions could boost housing policy to the forefront of the nation’s political agenda.

Suggested Citation

  • Daniel G. Lindberg, 2024. "Interest rates and lifestyle-driven moves for older adults: a vector autoregression analysis," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 59(1), pages 39-50, January.
    • Handle: RePEc:pal:buseco:v:59:y:2024:i:1:d:10.1057_s11369-023-00344-0
    DOI: 10.1057/s11369-023-00344-0
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