While the Great Recession managed to creep into every crevice of the industry, householders aged 65 and over managed to deflect a lot of the damage that many other homeowners felt. However, they did experience repercussions, just in different ways.
According to the latest special study from the United States Census Bureau on people 65+ in the United States, older householders tended to be less vulnerable to home foreclosures during and after the Great Recession.
Even leading up to the financial crisis, from the 1990s to 2006, the homeownership rate for those 65 and older witnessed little fluctuation. And after 2006, homeownership rates stlll didn't decline for older householders, with a homeownership rate of 80.9% in 2011, unchanged from the rate in 2006.
But it was not all good news for older householders, who still felt pain in these three areas:
1. Household debt
When housing prices rose prior to the recession, homeowners 50 and over were more likely to extract equity from their home if they had debt than if they did not have debt, with two popular methods being an equity line of credit and a reverse mortgage.
As a result of extracting equity from their home, the mean housing debt increased and continued to rise between 2008 and 2009.
If they were not impacted there, some were unintentionally affected from others who defaulted on their mortgage loans, depressing the value of nearby homes and resulting in a reduced tax base for communities.
Although older households might have been safe, surrounding neighbors could have been negatively impacted by rising unemployment and rising interest rates on adjustable rate loans.
3. Transition delays
In the short run, older households delayed their transition into senior housing, such as assisted living facilities and independent living facilities, because of the decline in housing prices.
The occupancy rate at independent living facilities fell from a peak of 92.7% in the first quarter of 2007 to 87.1% in the third quarter of 2010. In addition, the occupancy rate for assisted living facilities also dropped from a peak in the first quarter of 2007 (90.7%). The rate began to rise after reaching a trough of 87.6% in the first quarter of 2010.