Hud Takes A Closer Look At Senior Finances, Housing Affordability Pain Points

The U.S. Department of Housing and Urban Development (HUD)’s Office of Policy Development and Research recently published a report that more closely examines the housing needs of older Americans and the pain points that have exacerbated their needs stemming from a national housing crisis.

The material featured came from a workshop hosted by Fannie Mae and the Federal Reserve Bank of Philadelphia, which highlighted research assessing “the impact of demographic shifts, including the aging U.S. population, on housing demand,” according to the report.

In a session chaired by Longbridge Financial CEO and Columbia University finance professor Chris Mayer, researchers shared findings — including those related to health care costs and their contributions to housing affordability issues faced by seniors.

Peyton Whitney, a researcher at Harvard University’s Joint Center for Housing Studies (JCHS), presented findings from a paper she co-authored with Samara Scheckler and Jennifer Molinsky that examined the impact of aging on the ability to afford housing.

“Whitney noted that nearly 70% of adults aged 65 and older will need to purchase long-term care (LTC) services at some point in their lives, yet their ability to purchase this care is constrained by high costs and limited public assistance,” the report explained.

“The authors analyzed 9.9 million households with individuals over age 75 to estimate older adults’ current ability to afford housing and daily LTC service, identify disparities, and consider opportunities for improvement.”

The analysis found that only 24% of older adults “earned enough income to pay for housing, living expenses, and daily LTC service, which cost $67,000 per year at median for a population with a median annual income of $40,000.” These shortfalls were even larger among people of color and those experiencing “functional difficulties.”

While deploying home equity to pay for this care made an impact, based on the findings of the researchers, they still expressed concerns for the potential implications on generational wealth transfers and “existing racial inequalities in homeownership.” Expanding LTC access with more programs, realigned eligibility criteria and investments in community infrastructure could help to address the “dual burden” of housing and long-term care.

Lucas Taulbee of the University of Kentucky presented a recent paper co-authored with Hope Harvey and Kristin Perkins, which assessed the potential impact of shared living agreements (such as roommates) and the impact this could have on costs.

They found that “living in a shared household appeared to provide a financial safety net for guests, who had lower cost burdens than did adults in nonshared households and saved between $500 and $700 per month by living in another person’s home,” according to the report. “It was less clear whether hosts benefited from the arrangement.”

A separate paper also aimed to determine if homeownership had a positive impact on these cost issues. Kimberly Luchtenberg of American University, along with co-authors Ashleigh Eldemire and Matthew Wynter, largely found that it did.

“Seniors who became homeowners were able to preserve more wealth as their liquid savings declined,” the HUD report stated. “According to Luchtenberg, the [HUD Housing Choice Voucher Homeownership] program can provide insurance against loss of income. These benefits extended to minority-led households and were even more pronounced for ‘coresident’ households, or those with dependent children who rely on seniors (often grandparents) for care.”

But these households can often face their own financial challenges like the costs of raising a child, and they often have “limited eligibility for public assistance,” the paper found.

“Transitioning to homeownership reduced disparities between coresident and non-coresident households by 89%. Owning a home earlier in life and buying a home in a low-poverty neighborhood seemed to extend these benefits further.”