When it comes to affordability issues, first-time buyers tend to get all the press. But America's seniors face their own set of housing problems, affordability being just one of them, points out a new report from the Washington, D.C.-based economic and social policy research group Urban Institute.
America "is ill-prepared" for its aging population that will soon see seniors outnumber children for the first time in the country's history, the report states. "Senior households are facing a combined crisis of housing affordability, accessibility, and availability."
Older households are already constrained by higher housing costs, with the burden falling especially hard on those who are on fixed incomes. Seniors who spend more than half their incomes to put a roof over their heads have more than doubled over the last 20 years, from 5.2 million to nearly 11.7 million, according to the U.S. Census Bureau.
But like other households, seniors are constrained by more than just rent costs or a mortgage payment. Items like utilities, home insurance, property taxes, maintenance, association fees, and other charges can also weigh heavily. When they are on fixed incomes, though, seniors don't have any extra cash to pay rising or unforeseen expenses.
Some demographic groups are more at risk than others, the Urban Institute report finds. Older seniors are more likely to be affected than younger ones, for example, and renters are more likely to be affected than homeowners.
To help with this situation, the Urban Institute offers several recommendations for policymakers at all levels of government. But mortgage professionals can play a role in helping overburdened elders.
For one thing, if loan officers don't specialize in financing for seniors, they can align themselves with real estate agents and brokers who do; those are relatively easy to find. Several organizations offer professional designations for agents who have taken advanced courses in working with seniors.
One of those, the National Association of Realtors (NAR), offers the "Seniors Real Estate Specialist" appellation, and the independent, Oklahoma-based Seniors Real Estate Institute has its "Certified Senior Housing Professional" designation. Tangentially, some agents hold the "Certified Senior Advisor" title from the Society of Senior Advisors.
Loan brokers can also work directly with seniors by joining teams of like-minded professionals from other disciplines. That's what Ernie Castro of Mutual of Omaha Mortgage did when he teamed up with realty agent Tom Shipe of Long & Foster Realtors to form Superior Options for Seniors in northern Virginia.
The group, which also includes an insurance agent and a wealth management advisor as well as professionals from other fields, claims to have supported more than 27,000 families with its combined resources.
At the government level, meanwhile, the Urban Institute report suggests that lawmakers and regulators consider property tax deferrals to help seniors defray rising tax burdens. It also urges states to issue Medicaid waivers to cover housing supports, like emergency rental assistance.
Authorities also could consider subsidizing insurance costs for low- and fixed-income households and regulating the private insurance industry to take some of the heat off seniors, the report suggests. And they could fund more Sec. 8 housing vouchers and expand the number of subsidized units.
The report also points out that while many seniors wish to remain in their homes as they age, their places often have become too big, especially for the 75% of senior households who live alone or with only one other person. In other instances, their houses may be old and in poor condition.
According to the University of Michigan's Health and Retirement Study, one-third of all households headed by someone older than 50 lack of the financial resources to cover even the median out-of-pocket costs to modify their homes so they can remain in them comfortably.
To help, the report recommends Medicare be allowed to cover the cost of home modifications seniors require for improving their health and mobility, among other things. It also states that the Federal Housing Administration (FHA) should simplify and introduce more low-cost options in its Home Equity Conversion Mortgage (HECM) program.
