Will Housing For Older Americans Become A Bigger Issue In The 2020s?
The housing crisis in the U.S. has been well documented. Long story short, many Americans can't afford to purchase a home or even afford to rent as prices exceed what many people can afford throughout the country.
Tens of millions of older Americans are not immune from these issues either. As baby boomers, those born between 1946 and 1964, are quickly approaching their 80's, the issue of housing could become a problem for them as well. In the next ten years, 72 million Americans, about 20% of the U.S. population, will start reaching their mid-80s.
With home prices and rent continuing to increase, Americans who are approaching retirement may face the same affordability crisis as the millennials they've mocked for so long. The monthly Social Security benefit will be $1,503 per month next year. For many who haven't sufficiently saved for retirement, these funds won't go a long way. According to the Economic Policy Institute, the median savings for families whose wage earners are between 56 and 61 is $17,000.
This may explain why so many older Americans are still working. According to the AARP, adults over the age of 65 are twice as likely to be working today compared to 1985. As of February, the percentage of adults over the age of 65 who are either working or looking for work was more than 20%, compared with 10% in 1985. The last time at least 20% of Americans 65 and older were working was in 1962.
According to a report last year from The National Low Income Housing Coalition, nearly one-third, 32%, of extremely low income renter households are seniors, defined as at least 62 years old.
Developers who were banking on the idea of baby boomers moving to senior housing are seeing their investments backfire. The number of senior housing units built last year more than doubled from 2014. Amidst the building boom, occupancy has fallen from 92% in 2014 to 88% as of the third quarter of this year.
Unlike millennials, who are fleeing to the suburbs in search of affordable housing to raise families, older Americans don't want to move at all. "People don’t want to go to a place where there’s only a bunch of other old people," said James Crispino, head of the senior practice at design firm Gensler.
While many baby boomers are financially sound, holding $14.1 trillion in real estate and 35 times the amount of equities and mutual fund shares as millennials, there are plenty that currently face and will face housing issues over the next decade. For those who have retirement funds via investments and equity in inflated homes, what will the implications be should stocks and housing face another severe downturn as they did during the great financial crisis?
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