America can fill the New Orleans Superdome with newly-minted seniors each and every week.
These folks are buying and selling homes, downsizing, relocating, celebrating milestones and occasionally suffering misfortune. Most importantly, they need your help. Harvard released its comprehensive Joint Center for Housing Studies “Housing America’s Older Adults 2018 report,” and the stats are stunning. Let’s take a look at how you can use this info to serve your senior clients.
Increase in older households
America is graying, and you can see that across the world of real estate. A stunning 65 million households are headed by someone age 50 and above. In fact, over half of all American households are now over 50.
These numbers will only increase. Every day, 10,000 Americans turn 65, according to Lawrence Yun, Chief Economist of the National Association of Realtors. Baby boomers are driving this explosive senior population growth.
In five years, the population of folks over age 50 increased by 10.5 million to a total of 112 million people. In less than a decade, the baby boomers will start to turn 80, and all of those folks will need a home for their golden years.
Are we prepared? As real estate agents, you’ll likely have more senior clients. The demographics are in their favor. The National Association of Realtors offers a Seniors Residential Real Estate Specialist (SRES) designation, you’ll find it helpful if you’re interested in the senior market.
Owning is better than renting
The Harvard study revealed something that all real estate agents know: It’s better to own than to rent. It turns out that senior homeowners enjoy a net worth many times higher than their age-matched renter peers. The median net worth of a homeowner age 50-64 was 60-times that of a renter. Dramatic differences persist at all ages and all income ranges.
One might be tempted to posit that people who have more money buy homes and their homeownership simply reflects their greater assets. But, a homeowner’s non-housing wealth exceeds a renter’s total wealth at all income brackets. It’s hard to explain this any other way than to conclude that a lifetime of homeownership enhances one’s total net worth.
This is powerful evidence you can use to convince all your clients, regardless of age or income, that homeownership is a worthwhile investment. We all need to think about retirement, and owning a home may be one of the single best ways to prepare.
The income and net worth of older adults
The income of seniors is a mixed bag. Overall, seniors are enjoying meaningful growth in income. Folks age 65-79 increased their household income 10 percent over five years, up to $44,000 annually. That additional income can go a long way toward an improved quality of life and sense of security.
Sadly, a lot of that increase comes from seniors working later in life and delaying retirement. The elderly are now competing with teenagers for fast food jobs.
As is often the case with income, not everyone is benefiting from the improved economy. Unfortunately, the number of elderly with low incomes is also increasing.
There are now nearly 9 million households over age 50 scraping by on under $15,000 a year, and this number is growing. As a result, more senior households are financially severely burdened.
Five million seniors spend at least half their income on housing. This is especially tragic since it causes many elderly to choose between their home and food/medicine. Social Security made up more than two-thirds of the income for the median older household. For these older Americans, their income is unlikely to increase, and their situation won’t improve. They need our help.
Racial disparities exist
Older Americans are increasingly diverse. While 83 percent of those over 80 are white, only 60 percent of households over age 50 are. We can expect to see increasing diversity over time, and we need to prepare for their needs.
There is a significant racial disparity in homeownership, with minorities more likely to rent. Among households over age 50, 81 percent of whites own homes while only 57 percent of African Americans and 60 percent of Hispanics own their own homes.
Asian Americans enjoy a relatively high 71 percent homeownership rate. Older minority households have a lower income and a higher rate of disability compared with their caucasian peers. Moreover, minority homeowners have a lower net worth than their white peers across all income ranges (fig 2).
Older homes are often inaccessible
Aging in place is the goal for many Americans. Unfortunately, their homes are often not suitable for the long term. One in 4 households over age 50 includes a member with a disability. Almost half of all households over age 80 suffer from difficulty with ambulation.
Many homes are simply inaccessible for those with physical limitations. The elderly in wheelchairs face particularly steep challenges. Only 3.5 percent of homes had one floor, wide halls and doors and no-step entry, according to data from 2011.
If you include lever-style door handles and low electrical controls, less than 1 percent of homes are suitable for those in wheelchairs. Given the low income of most older adults, it might be difficult or impossible for them to retrofit their homes on their own. They can become prisoners in their own inaccessible homes.
As a real estate agent working with folks planning for retirement and looking to age in place, make sure the house is appropriate for the disabled. You never know when disability will strike, so preparation is key.
Ideally, there should be no stairs, no steps on entry, wide doorways and an accessible bathroom and kitchen. Retrofitting after the fact is expensive!
As John Hoeven said, “Caring for our seniors is perhaps the greatest responsibility we have. Those who walked before us have given so much and made possible the life we all enjoy.” We have an obligation to understand senior housing so we can do right by this large and vulnerable group.