Many factors affect older adults’ ability to remain independent and actively engaged in the community. These include the availability, affordability, suitability, and variety of housing options. For the more than three-quarters of people age 50 and over who are homeowners, home ownership can improve financial well-being. Home equity is often the primary and sometimes only financial asset in retirement.
Rental housing remains an integral part of the housing equation. Roughly one-third of American households rent. Renters may be more vulnerable to housing price volatility in high-demand housing markets. And older renters are more likely to face housing cost burdens than those in other age groups. A recent study found that half of renters headed by someone age 65 or older spend at least 30 percent of their income on rent. Over one-fifth in this age group spend at least half their income on rent.
Some older adults experience housing problems resulting from high housing costs, inaccessible home design features, disrepair, or all three. These problems can reduce physical safety, increase isolation, and prevent people from aging in their homes and communities. A livable community contains a range of housing options. This ensures that residents of all backgrounds, income levels, and ability levels can find housing that meets their needs.
The financial and physical burdens of maintaining a property can result in a decline in physical and mental health. Conversely, health problems may lead to difficulties in maintaining or holding onto a home. Losing a home because of financial difficulties, health issues, or other housing struggles may result in a loss of essential community ties. It can also lead to premature or unnecessary institutionalization. Both of these have been linked to a decline in physical and mental health.
Rising utility costs and, in many instances, higher costs for property insurance have compromised housing affordability (see also Chapter 10, Utilities -Telecommunications, Energy and Other Services—Universal Service, as well as Chapter 11, Financial Services and Consumer Products—Unfair Insurance Practices). Although construction of new rental housing has increased in recent years, the population of renters is growing rapidly and far outpacing the available supply. Moreover, the supply of affordable rental housing (whether market-rate or subsidized) continues to fall far short of what is needed. In many jurisdictions, the rapid increase of construction costs and local development fees has had a dampening effect on the construction of affordable housing units.
Because of the overall rental shortage, competition for available units can be intense, thus driving rents higher and pricing renters with low incomes out of more markets. As of 2013, there were just over 11 million renter households with extremely low incomes across the U.S. but only 4.3 million affordable units available. No county in the U.S. has an adequate supply of affordable housing for households with lower incomes. In fact, only about one in three (1.4 million out of 3.9 million) income-eligible older households receives assistance.
Of those receiving some form of housing assistance, many are led by or include older adults. About one in four assisted older households use Department of Housing and Urban Development (HUD) Housing Choice vouchers. Households headed by people age 62 and older represent almost half of HUD-assisted Section 8 units, Among households with very low incomes that are headed by people age 62 and older not receiving assistance, more than half (51 percent) face excessive housing costs or live in severely inadequate units or both, according to HUD figures. And as the population ages, this trend will worsen.
Yet despite increasing demand, even existing affordable rental units are in danger of being lost. Nearly half of the lowest-cost unassisted rental stock is at least 50 years old, and this stock is being demolished at twice the rate of higher cost units. At the same time, contracts and covenants for hundreds of thousands of units with project-based rental assistance are set to expire over the next decade, which may result in their conversion to market rate properties. Furthermore, roughly 10,000 public housing units are lost each year due to cuts in federal outlays for repairs.
A lack of policy coordination between HUD and the Department of Health and Human Services (HHS) often creates barriers to the creative use of housing to meet the health and long-term care needs of older residents of affordable housing. Seventy percent of older adults receiving HUD assistance are dually enrolled in Medicare and Medicaid, so an effective combination of housing and services could have a significant impact on program use and costs at HHS Housing.
Unfortunately, housing providers often find it difficult to use current funding streams from the health care side to effectively sustain long-term services and supports for residents, such as helping with self-care activities and household tasks. Closing the affordable-rent gap should be a top policy priority.
Fortunately, many programs offer the potential to make progress. One such program is the Low-Income Housing Tax Credit (LIHTC). Since its creation in 1986, this program has helped support the creation and preservation of some nearly three million affordable rental units. Another program is the National Housing Trust Fund (NHTF).
The Bipartisan Policy Center estimates that an expansion of the LIHTC by 50 percent over its current funding level would help preserve or construct an additional 400,000 affordable rental units over ten years. The Federal Housing Finance Agency recently authorized Fannie Mae and Freddie Mac to make contributions to the NHTF as authorized by the Housing and Economic Recovery Act of 2008. Contributions by the two secondary mortgage market companies are expected to generate between $300 and $500 million annually. In 2016, the NHTF allocated $173.6 million to states to fund rental housing for households with low incomes.