How Will Aging Baby Boomers Affect the US Housing Market?

In Harvard’s Joint Center for Housing Studies’ recent report The State of the Nation’s Housing 2015, researchers identify a number of housing trends that are affected by the growing proportion of older adults in the US population as the baby boomer generation reaches retirement age. This report both highlights the current state of affairs in the housing market for older adults and points to the future needs of an aging population as an unprecedented number of older adults are no longer able to live independently.

The report notes that, for the time being, many baby boomers will be staying in their single family homes. As a result, there will likely be higher spending on remodeling of existing homes, as well as lower turnover in the overall housing market in the short term. In fact, the report notes that if not for the aging of the population, the overall homeownership rate in the United States as a whole would have dropped even lower than it has. In the short term, the housing market will also be affected by the increase in incomes for individuals over 65, due to the trend toward longer working lives. Between 2004 and 2013, the median income of households of those 65 and better jumped 18 percent, which is largely due to increased labor force participation. As of 2014, 18 percent of older households were headed by a working adult, as compared 13 percent in the 1990s. On the other hand, the report also notes that high mortgage debt is a concern among older homeowners, since they will be faced with declining incomes as they enter their retirement years. (In 2013, 38 percent of homeowners had mortgages, as compared to just over a quarter in 2001.) Also concerning is that the median amount of that debt has doubled during that period. Moreover, the median equity of older homeowners was down to $125,000, the lowest amount seen since 1998. The report suggests that, “For those seniors that choose to age in place, rising debts and wealth constraints may leave retired homeowners struggling to make their mortgage payments.”

Among renters 65 and better, the report also notes that cost-burdened renters in the bottom expenditure quartile spent 65 percent less on health care and 41 percent less on food than otherwise similar households with affordable housing. In terms of individuals receiving housing assistance, the report noted that a third of the households receiving HUD assistance were headed by an adult 62 or better, and over 60 percent of USDA assisted renters were older adults or individuals with disabilities.

The current housing situation for older adults will begin to change in another decade, when the oldest baby boomers are hitting their late 70s and are beginning to face more significant challenges for living independently. This report notes that over the next two decades, the number of adults over 70 will increase by 91 percent. In their evaluation of the current state of the housing market, the authors conclude that “the existing housing stock is unprepared to meet the needs of a large and growing senior population.” The facts that many older adults live alone, have at least one disability, and have limited resources to pay for housing creates a situation in which demands for housing that is affordable, accessible, and can provide both social connection and supportive services will grow greatly over the next 20 years. The report suggests that “the unprecedented growth in the number of senior households will test the ability of the nation’s housing stock to address the spiraling need for affordable, accessible and supportive units.”

This report raises a number of concerns about the current state of the US housing market for many older adults, with significant numbers of homeowners and renters facing financial strains, particularly as they enter retirement. The housing trends that the report highlights as baby boomers age over the next decades also suggest that current housing stock is not prepared to meet the coming needs of an aging population.



Harvard’s Joint Center for Housing Studies. The State of the Nation’s Housing 2015.

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