A Case for Increased Rental Housing Supply: Older Americans’ Growing Share of US Households Presents Housing Affordability Concerns
Harvard’s Joint Center for Housing Studies (JCHS), as part of its ongoing analysis of the State of the Nation’s Housing Report, recently released a look at characteristics of older adult households. Housing America’s Older Adults 2018, the latest in a series of JCHS reports on housing older adults, looks at 2016 data for older adult households, those headed by individuals 50 years of age or older. In 2016, older adult households accounted for 55 percent of all US households. This growing population presents housing stakeholders with new obstacles to address. As we struggle to address the affordable housing shortage in the US, we must also contend with older adult households’ need for accessible housing in communities that provide the services this population will need.
The JCHS research revealed that not only has the number of older adult households increased but so has the concentration of older adults. From 2000 to 2016, the number of census tracts with a majority older adult population more than tripled in the US. The location of these households also changed during these 16 years – in 2000, census tracts composed mostly of older adult households were primarily found in the Southeast and Southwest but in 2016 there was a shift to northern and western states. The types of communities older adult households live in is also changing, with the share of older adults living in low-density neighborhoods increasing from 24 percent to 32 percent. This is particularly important as low-density areas have a tendency to lack the services older adults need and single-family homes tend to be the predominant dwelling type, meaning there are fewer housing options compared to denser communities.
Overall, there was good news for older adult households in terms of income and wealth, though, unfortunately, not everyone benefitted equally. It may not be surprising that in most categories renters did not fare as well as homeowners, but it is no less troubling. Median renter incomes for older adult households was $28,000 compared to a median income of $61,000 for older homeowners in 2016. The gap in median incomes for older households by tenure is larger than that for all renters and homeowners – the 2016 American Community Survey estimates reported median homeowner income was $71,000 compared to a median renter income of $35,000.
Renters also have less wealth than owners as wealth is often tied to homeownership. The chart below shows in 2016 renters net worth is just 2 percent of that of homeowners across the various age ranges. There is a slight uptick in older renters median net worth as they age – the net worth of renter households aged 80 and over is 51 percent higher than renters aged 50-64 years old, but is still very low at just $7,550 (compared to same aged homeowners who have a median net worth of $339,900). It should be noted that while homeownership rates are high for older Americans (76.2 percent of older adult households own their homes), rates are declining for all older adult households and in some categories are lower than their pre-recession levels.
Income and wealth can be indicators of how well households can cover their housing costs. While a slightly smaller share of older adult households were facing housing costs burdens, decreasing from 32 percent to 31 percent in 2006 to 2016, the percentage of cost-burdened renters rose to 50 percent while the percentage of cost-burdened homeowners decreased to 24 percent. Homeowners were buffered from cost-burdens as their incomes increased faster than housing costs. But, as incomes generally tend to decrease with age, the share of cost burdened households increases with age. Additionally, one should expect to see more cost-burdened older adult households in the future as the number of low-income older adult households has been increasing. There was a 39 percent increase in the number of older adult households earning less than $15,000 per year.
In addition to possible cost burdens, as individuals age accessibility also becomes a concern. Functional limitations—visions, hearing, cognitive, self-care, mobility and independent living difficulty—increase as one gets older. The JCHS study found that a little over one-quarter of older adult households had a member with at least one of these issues. Just as there is a shortage of affordable housing, there are also not enough accessible homes to meet demand. Based on the most recent data available, homes that are one-level, with no entry steps and extra-wide halls and doorways account for just 3.5 percent of homes in the US. Even fewer homes would be available if additional measures of accessibility were considered. Higher income, wealthier older adult households may have the funds necessary for renovations to make their existing housing more accessible, but renters and low-income homeowners are more likely to rely on limited government assistance to renovate their homes.
For aging households, counting on government assistance can prove problematic as funding for various programs has not kept pace with demand. The JCHS analysts found that housing assistance is not available for all who need it, stating that only one-third of very low income households age 62 and older who face severe housing cost burdens and/or live in severely inadequate housing received the assistance they needed. Furthermore, HUD’s Section 202 Supportive Housing for the Elderly program saw funding cut from 2016-2017. On a positive note, while there had been no new funding for Section 202 housing since 2012, Congress has appropriated new construction funds for fiscal year (FY) 2018, and is likely to do so again in FY2019. Still, even with modest new funding on the horizon, years with no new supporting housing construction means the supply problems faced by older households have only worsened. Add to all of this the fact that Social Security payments, which many older adult households rely on, have not kept pace with housing costs and there is a large segment of older adult households that are at risk.
This all has great implications for affordable housing advocates as the US already suffers from a shortage of affordable housing, particularly in light of the potential affordable rental homes we stand to lose due to tax policy changes. Congress has taken some steps to recoup some of these homes, but it cannot stop there. In addition to the provisions of the Affordable Housing Credit Improvement Act (AHCIA) that have already been passed, legislators should consider other measures to strengthen the Low Income Housing Tax Credit that can increase the supply of affordable rental housing. While there are no specific AHCIA provisions targeting older adult households, many would surely benefit from those aimed at preserving affordable housing—including the proposed minimum 4 percent credit rate, which would make financing developments that require the preservation of affordable housing more predictable and feasible—and the 50 percent basis boost for projects serving extremely low-income households, a category sure to include a sizable number of adult renter households, particularly those dependent on public assistance and Social Security.
The aging of the baby boomers and increased longevity means there will be considerable numbers of households in their 70s, 80s and 90s, a significant portion of whom will need affordable and accessible housing. With older adults found to be concentrated in certain parts of the country, and more and more in low-density neighborhoods, this would mean that affordable senior housing and services will need to improve in these locales as well. The report concludes that everyone has a part to play in ensuring housing for older Americans is available including individuals, public and private actors, and government at all levels. With the pace at which American households are aging the time is now to prepare to meet the needs of older adult households.