The state of the nation’s housing appears dismal overall, but the outlook is even more bleak for older homeowners, new research shows.
The nation’s homeownership rate fell to 64.5% last year, erasing nearly all of the increase in the previous two decades, according to the latest report by Harvard University’s Joint Center for Housing Studies (JCHS). “The State of the Nation’s Housing” provides an annual assessment of the housing outlook, and summarizes trends in economics and demographics.
The mortgage crisis that severely impacted the housing market may have left both lenders and consumers with “PTSD,” said Paul Weech, president and CEO of NeighborWorks America during a JCHS webcast Wednesday to discuss the report’s findings.
And while those who do own homes continued to pare down their mortgage debt in 2014, older homeowners are one group for which high mortgage debt is still a concern because “they are entering their retirement years with declining incomes,” JCHS said in the report.
More than a third (38%) of owners aged 65 and over had mortgages in 2013, up from a little over a quarter in 2001, data show.
“Moreover, the median amount of debt they carried doubled over this period in real terms,” JCHS said. At the same time, the real median equity of older owners in 2013 was down to $125,000—lower than in any year since 1998.
“Having less equity and large mortgage payments late in life is a troubling prospect for households on fixed incomes,” JCHS said.
The aging baby boomers will lift the number of older households aged 65 and over 42 percent by 2025, and double the number aged 80 and over by 2035, data show.
“A large majority will likely remain in their single-family homes for the time being, implying lower turnover in the housing market and higher spending on remodeling of existing homes,” JCHS said. “For those seniors that choose to age in place, rising debt and wealth constraints may leave many retired homeowners struggling to meet their mortgage payments.”
Access the report here.
Written by Cassandra Dowell