Home Equity Might Make Aging in America Easier

Millions of middle-class Americans face an enormous economical challenge as they age into their late 70s—the dual burden of housing and long-term services that older adults require.

Increasingly, moderate-income seniors—those who make too much to qualify for government assistance—must sacrifice care (including medical and personal assistance) for their home, or vice versa.

Those who own a home with equity, however, could be better positioned to afford both.

That’s according to Harvard University’s Joint Center for Housing Studies Housing Older Americans report, which highlighted our country’s growing need for more and better options for older adults.

Senior population facing economic crunch

Today only 14% of adults over 75 who live alone can afford a daily home health aide visit after paying for housing and other living costs, and just 13% can afford an assisted living facility.

Harvard fellows refer to the previously mentioned moderate-income Americans as GAPS Households, because they fall into the gap between affordability and public assistance.

Summarizing the recent report, Research Associate Tamara Scheckler and Research Assistant Peyton Whitney write that home equity creates opportunities for many households straddling the gap between affordability and public assistance to pay for care, either at home or in assisted living.

They pointed out that more than three quarters of those gap households owned their home as of 2021, with a median home equity of $250,000. “Upon sale, the proceeds could fund care in assisted living for a period of time,” they note.

This may not be a viable option for the 28% of “gap” homeowners with outstanding mortgage debt, which reduces their available equity and makes further leveraging more difficult, the researchers explained.

In search of solutions

The findings related to homeownership present an opportunity to push preventative solutions, says JCHS Managing Director Chris Herbert.

“Given the importance of housing equity later in life there is a real need for safe and affordable mortgage products that work for older owners with limited incomes,” he said.
Harvard’s 2023 research revealed just how serious the issue of housing aging Americans will become over the next decade, as members of the Baby Boomer generation enter their 80s.

In the past 10 years the 65-and-over population soared by 34% from 43 million in 2012 to 58 million in 2022, they note. Now the fastest-growing demographic will be those over 80, a demographic most likely to need accessible housing as well as services and support at home.

The researchers note in no uncertain terms that the U.S. is not ready to provide housing and care for this surging population.

Meeting a greater need

As with housing, government programs provide critical assistance to eligible older adults in need of help with homemaking or personal care. Also as with housing, the available funds pale in comparison to the need.

Lower-income Americans, the 58% with annual incomes under 50% of their area median income, are more likely to receive government services or, in some states, home and community-based assistance through Medicaid waiver programs.

Yet even among the lowest financial bracket—which statistically also suffers more health-related problems than their higher-earning counterparts—assistance scarcely meets the demand. Neither housing assistance nor publicly funded long-term care services are entitlements. According to the U.S. Department of Housing and Urban Development, only about a third of eligible households receive the much-needed support. Applying and qualifying can be complex, an inaccessible process, and waiting lists can extend for years, Harvard’s associates note.

Researchers concluded that the need for medical and other types of care will be “a major driver of older adults’ housing choices” in coming years.

Should policymakers, housing advocates, and industry professionals fail to meet the “tremendous need for creative alternatives to existing models,” an increasing number of older adults with very low incomes—as well as many households with moderate incomes, particularly renters and homeowners with housing debt—“will have to forgo needed care or rely on family and friends for assistance, loved ones who will almost certainly bear their own financial and emotional costs in turn.”

The Housing Older Americans report explores a patchwork of potential solutions and compares services and housing situations among 97 metro areas. It details costs of in-home assistance versus assisted living facilities while stressing that the two vital forms of care are not necessarily interchangeable.

The full paper, available at jchs.harvard.edu, includes an interactive map with per-metro comparisons.

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Christina Hughes Babb

Christina Hughes Babb is an independent journalist who has written for DS News and MReport since 2020. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years, has penned thousands of articles on housing and real estate, politics, entertainment, and human interest for the likes of Texas Monthly, Salon.com, and Dallas Morning News. She has won two Mayborn School of Journalism nonfiction writing prizes, a Society of Features Journalism award, and numerous awards issued by Independent Free Papers of America for her work at Dallas Advocate magazines. Reach her on Instagram @chughesbabb.
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