New Study Finds 78% of Seniors Prefer to Age in Place

While many home owning seniors prefer to age in place, housing market trends are disturbing some analysts who say baby boomers and other generations approaching old age will retire with unaffordable mortgage balances.

Seventy-eight percent of home owners aged 65 and older intend to age in their homes, according to the Joint Center for Housing Studies (JCHS) of Harvard University’s latest State of the Nation’s Housing Report.

The aging of the baby-boomer generation over the next decade will increase the number of households aged 65 and over by some 10.7 million, according to JCHS. From 2015 to 2025, the number of households aged 70 and older will increase by approximately 8.3 million and account for more than two-thirds of household growth. The number of householders aged 60 to 69 is also projected to rise by 3.5 million, adding to the overall aging of the population. 

“If housing costs stay fixed at relatively high levels with income levels coming down substantially it quickly becomes unaffordable,” said Mike Calhoun, president of Center for Responsible Lending, during a JCHS webinar Thursday. “The 30-year fixed rate mortgage is important for overall planning. During the boom, home equity lending was a big driver of consumer expenditure, and now that we got this hangover you see that play out in older households, and as they hit retirement they don’t have a mortgage they can afford.”

Mortgage rates on 30-year fixed loans rose from 3.6 percent to 4.4 percent in 2013, before falling back in early 2014.

Those in their 50s are facing a very different future than those who currently own and have retired in their homes, said Chris Herbert, research director for Harvard Joint Center for Housing Studies.

Since 2002, the real median annual incomes among households in their 50s — the peak earning years for this group as they look to retire over the coming decade — have fallen by $9,100 among 50 to 54 year-olds and by $5,700 among 55 to 59 year-olds.

“There’s worry about those in their 50s getting to retirement and many have lost homes to foreclosure, or had to refinance to make ends meet — living rent-free for retirement is key for wealth,” Herbert said.

And while many seniors may prefer to modify their homes to age in place, a lack of first-time home buyers is bad news for seniors who desire to sell their homes and move into senior living communities.

Rising interest rates, tight credit, stagnant incomes and debt hammer would-be buyers, the study found.

“You need that first time buyer to help home owners move [on to other properties],” Herbert said.

Read the full report here

Written by Cassandra Dowell

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