The availability, affordability, suitability, and variety of housing options can affect older adults’ ability to remain independent and actively engaged in the community. In addition, 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.
Many older adults experience serious housing problems because of high housing costs and inaccessible home design features. This situation decreases physical safety, causes isolation, and may prevent aging in place. 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 important community ties, and/or premature or unnecessary institutionalization, both of which have been linked to a decline in physical and mental health.
Some older adults require home- and community-based supportive services and programs (see Chapter 8, Long-Term Services and Supports—Expanding Home-and Community-Based Services). They also need appropriate transportation options to give them alternatives to driving (see this chapter’s section on Transportation). In addition, they need consumer legal protections in home lending and home improvement services (see Chapter 11, Financial Services and Consumer Products—Regulation, Monitoring, and Enforcement of Consumer Financial Products). Finally, they need access to emerging technologies such as broadband Internet, which supports independence (see Chapter 10, Utilities: Telecommunications, Energy, and Other Services—Broadband Services).
Housing Affordability—housing is the single largest expense in older households (Figure 9-1). For some older adults living on a fixed or limited income, the high costs of renting or owning a home can pose an insurmountable problem. Households that spend more than 30 percent of their income on housing are described as “housing-cost burdened.”
Every additional dollar spent on housing costs and utilities takes away money from other critical needs such as food, health care, and transportation. Renters in this same age group tend to fare worse than owners. This presents a particular problem for older Americans, who are more likely to be struggling to make ends meet. Extremely tight housing markets result in higher rents and negatively impact low-income older adults and others who have difficulty finding housing.
Rising utility costs and, in many instances, higher costs for property insurance have compromised housing affordability (see Chapter 10, Utilities, Telecommunications, Energy and Other Services—Universal Service and Chapter 11, Financial Services and Consumer Products—Unfair Acts and Practices in the Insurance Industry). Long-time homeowners, whose property values have risen since their home purchase, may struggle with escalating property taxes (see Chapter 3, Taxation—Real Property Taxes and this chapter’s section Housing Affordability).
Rental housing—Americans are increasingly turning to the rental market for their housing. According to Harvard University’s Joint Center for Housing Studies, the US homeownership rate is now the lowest level in almost 50 years. Between 2005 and 2015, the number of renter households grew by close to nine million, with five million of those households headed by someone age 50 or older. With the projected growth in the population of older adults, the number of these households is expected to increase by about 20 percent by 2020 and by another 25 percent between 2020 and 2030.
Housing is essential to people’s well-being, particularly for older renters who, in addition to having fewer resources than older homeowners, are overall in poorer health. Research shows that when affordable rental housing is combined with supportive services, it significantly improves health outcomes and reduces health care costs. For example, the Support and Services at Home program, serving aging residents of affordable rental housing, reduced hospital admissions by 19 percent and cut in half the share of residents that experienced a fall over the course of a one-year pilot. Another study, in which chronically homeless older adults were placed in permanent affordable rental housing with services, found that for 51 residents over the age of 60, there was a nearly $1.2 million cost reduction in hospital-based health care compared with the year prior to placement. Further, a survey of empirical evidence by the Urban Institute found numerous studies linking housing affordability, physical quality, and service supports with a reduction in nursing home entries and other adverse health outcomes.
But for people who make less than the area median income, the nation faces a severe shortage of affordable rental housing that costs no more than 30 percent of their monthly income. 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 rental housing that is affordable for lower-income households continues to fall far short of what is needed. Because of the overall rental shortage, competition for available units can be intense, driving rents higher and pricing renters with low-incomes out of more markets. As of 2013, there were just over 11 million extremely low-income renter households across the United States but only 4.3 million affordable units available. No county in the US has an adequate supply of affordable housing for lower income households. The situation is continues to grow worse because rents are rising faster than renters’ incomes.
Federal housing assistance is critical to the financial stability and resilience of many older renters, but it is not an entitlement, and supply does not meet the need. 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. Households headed by people age 62 and older represent almost half of HUD-assisted Section 8 units, and about one in four assisted older households use HUD Housing Choice vouchers. Among the very low-income households headed by people age 62 or older who are 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 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.
As of 2015, 48 percent of tenants in rental housing with federal project-based assistance are age 62 and older, as are and 33 percent of tenants in public housing. A total of 1.1 million older renters live in these types of housing, including some 263,000 units of so-called Section 202 housing built specifically for older adults. Another 483,000 older renters receive Housing Choice vouchers to help them pay for rent in the private market. With 84 percent of HUD’s budget covering contract renewal for existing units and inflation-related costs, little room remains for proactive efforts.
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 support long-term services and supports for residents, such as helping with self-care activities and household tasks. A number of innovative federally assisted housing projects across the nation have successfully demonstrated how affordable rental housing can be a platform for cost-effective service delivery that enables aging in place and averts high-cost institutional care. However, to replicate these innovative programs in more communities, agencies and funding streams need to work together rather than in isolation.
Closing the affordable-rent gap should be a top policy priority. Fortunately, a number of programs offer the potential to make progress. These include the Low-Income Housing Tax Credit (LIHTC)—which since its creation in 1986 has helped support the creation and preservation of some nearly three million affordable rental units—and 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 National Housing Trust Fund (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.
Home as an asset—a homeowner’s residence is usually his or her single largest asset. Home equity provides older adults with financial security that helps them meet their needs as they age. It can serve as collateral for property upgrades, modifications, and repairs. It can also provide resources in the face of major, unpredictable health care expenses (such as long-term services and supports). In addition, equity can provide shelter, or assets to future generations, through inheritance.
The homeownership rate for households with at least one person age 65 and older increased from 78.1 percent in 1995 to a high of 81.1 percent in 2012, but it fell to 78.9 percent in 2015. Meanwhile, the national homeownership rate continues to drop steadily, falling from a high of 69 percent in 2004 to 63.5 percent in 2016. This downward trend can be attributed to the growth in the rental market that resulted from the housing market collapse. The median net worth of homeowners is rising, which is not true of renters. Moreover, in 2013, homeowner net worth was 30 times that of renters, and was even more disproportionate prior to the Great Recession, which caused home values to decline.
It appears that older homeowners in low-income households largely have held their wealth in their homes. According to the Harvard Joint Center for Housing Studies, home equity constitutes more than 75 percent of net wealth for older homeowners in the lowest income quartile, and almost 60 percent in the lower middle quartile. These homeowners’ net worth dropped by 30 percent sharply between 2007 and 2010 as housing values declined. With the bulk of their wealth tied up in their homes, older homeowners are at risk of losing their financial footing in the event of future negative market conditions.
Because of the home’s financial importance, protecting an owner’s investment is a critical policy goal. Home-repair and home-modification programs can help safeguard this physical asset. The same is true of improved construction standards for manufactured homes.
Housing adequacy and appropriateness—the physical features of a residence can be critical to a person’s ability to age in place. Unfortunately, much of the nation’s current housing stock may prove inappropriate as the population ages. This is particularly so for people who have physical mobility issues. Home modification is one method to help meet aging residents’ changing needs. However, modifications can be very costly and thus are often out of reach for many older adults, particularly those with limited incomes. There is growing recognition that designing homes to be adaptable and accessible from the start may generate significant financial and social benefits in the future. It is more cost-efficient to design home elements prior to construction than to retrofit homes after a specific need occurs. Accessibility features permit people to age in place rather than being forced to move to more expensive assisted living facilities or other institutional settings.
Across age groups, overall the number of people in the average American household is decreasing. Nevertheless, home sizes have grown over the last few decades. Older adults tend to have smaller-than-average households. One result of these competing trends is that older adults who desire to move may not be able to find their ideal housing size and type in their preferred location.
Services and community features—regardless of a home’s features, many older adults eventually need some supportive services to remain independent. This is especially true for those who live alone. It is much more cost-effective to provide these services in the home and community, where people prefer to be, than in institutional settings. However, two-thirds of households with members age 65 and older are now outside central cities, often dispersed in suburbs, small towns, and rural areas. Combined with the lack of suitable, affordable housing close to transit, this residential dispersion presents formidable challenges for effective service delivery.
The growing population of people age 75 and older will present special challenges. This age group is more likely to be renters, to live alone, and to experience poverty, health problems, and substandard housing. Meeting their multiple needs will require housing subsidies, more extensive provision of in-home health care, and community support services including transportation and mobility options.
Infrastructure that enables supportive technology can play an important role. For instance, broadband infrastructure can help support remote health monitoring of people in their own homes. It can also provide important links to a virtual community for those who might otherwise feel isolated (see Chapter 10, Utilities: Telecommunications, Energy, and Other Services: Telecommunications—Broadband Services).
Older adults who can no longer stay in their homes may require specialized housing with more extensive services. These may include assisted living, congregate housing, and group homes. Unfortunately, many older adults with moderate or low incomes cannot afford specialized supportive housing on their own, and subsidy and construction programs are limited. Policymakers face the crucial challenge of determining how to extend supportive housing opportunities to frail older adults with modest means (see Chapter 8, Long-Term Services and Supports—Assisted Living and Residential Care). The problem is especially acute for older renters with fewer financial resources. These residents are more likely to live alone and to have difficulty with everyday activities, such as walking, climbing the stairs, or doing errands outside the home without help.