Mortgage

Harvard: The average homeowner keeps getting older, and that’s a problem

Growing number of those aged 50+ are burdened by housing costs

As the Baby Boomer population ages en masse, the number of older homeowners in the U.S. has grown significantly. According to a report by the Harvard Joint Center for Housing Studies, 63% of U.S. homeowners are now 50 or older.

The study, titled “Housing America’s Older Adults,” breaks down the financial stability and living arrangements of the nation’s older population, revealing that many are unprepared for retirement and burdened by housing costs.

Considering increased longevity and population growth, the authors state that the number of households in their 70s, 80s, and 90s is “set to soar,” meaning that the issues facing this demographic will likely present serious challenges in the years to come.

“We need to address gaps in the affordability and accessibility of our housing stock, both of which are essential to older adults’ independence and wellbeing,” said Jennifer Molinsky, the lead author of the report. “As the number of households in their 80s grows, it will be essential that we strengthen the links between housing, healthcare, and other services.”

In its findings, which are based on U.S. Census data, the report highlights several notable trends among this demographic.

For one, 75% of adults 50-plus live in single-family homes and 76% own their own homes.

Of those 65 and older who own, the average amount of home equity was $143,500. And, more are carrying mortgage debt into retirement than in years past, which the authors call a “potentially troubling trend.”

From 1989 to 2016, the percentage of homeowners over 65 who still had a mortgage nearly doubled to 41%. Loan-to-value ratios also increased, doubling over the same time period to 51% for those ages 50-64, and tripling to 39% for those 65 and older.

“A variety of mortgage market forces have contributed to this shift, including low interest rates and the increased popularity of home equity loans once the 1986 tax reform act eliminated the deductibility of interest on other forms of debt,” the authors explained.

And while older homeowners have significantly more household wealth than renters – even when equity is discounted – an increasing number of older adults in both segments struggle to pay for housing, the report reveals.

“The number of households age 65 and over with housing cost burdens continues to climb. In 2016, 9.7 million households in this age group – nearly a third – spent more than 30% of their incomes for housing,” the report stated. “About 4.9 million were severely burdened, paying at least half their incomes for housing.”

The authors noted that Social Security will be a key factor to helping older adults shoulder housing expenses, as many rely on it as a main source of income.

“Looking ahead, the ability of many older adults to afford their housing will be closely tied to the fate of the Social Security program,” they asserted.

The authors concluded that addressing the problems facing older Americans will require a coordinated effort from public, private and nonprofit entities.

“Providing safe, affordable, and accessible housing to the nation’s aging population is an immediate challenge,” they wrote.

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