In only eight years, the first baby boomers (those born between the mid ‘40s and early ‘60s) will turn 80 years old. As they age, questions of where to live and how to afford it loom larger, but a new report from the Joint Center for Housing Studies at Harvard University finds a striking disparity in financial soundness between boomer homeowners and renters:
More than half of the nation’s households are now headed by someone at least 50 years of age. These 65 million older households are highly diverse in their living situations, financial resources, health and functional abilities, and life stages, and thus require different types of housing to meet their needs and preferences. Affordable, accessible housing located in age-friendly communities and linked to health supports is in particularly short supply. Demand for these units will only increase when the baby boomers start to turn 80 in less than a decade. And whether they own or rent, millions of older households struggle to pay for their housing and other basic necessities, and their numbers are rising. Households now in their 50s to mid-60s are especially at risk of having insufficient resources to manage rising healthcare and housing costs in their later years.
The abstract is a bit, well, abstract, but there are a number of key statistics to inform the housing affordability crisis for the oldest Americans.
First and foremost, not all boomers are equal when it comes to housing. The wealth of homeowners, particularly those who own their homes outright, is orders of magnitude higher than those of renters. This is unsurprising–in addition to restrictive land-use and zoning regulations sucking up the money from renters in the form of higher housing costs, these same laws increase the price of housing to the benefit of homeowners.
Though many older homeowners are retired (and most rely on Social Security as their primary source of income), there remains a substantial gap between the income of older renters ($28,000) compared to those of homeowners ($61,000). The report links this inequality to lower homeownership among those with lower incomes–they simply can’t afford to buy a house.
For further evidence of the effects of homeownership on wealth inequality, just look to the data for low-income homeowners relative to renters. Median homeowners 65 and over earning under $15,000 per year had only $9,000 in non-housing wealth, but $80,000 in home equity. Median renters in the same age cohort had a net worth of only $970.
For more on how homeownership drives inequality, read this study from Matthew Rognlie.