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Millennials setting stage for affordable housing woes in their later years

David Pendered
hive, condo, apartment

By David Pendered

The seeds of a future generation of older folks who struggle to afford a home are being sowed even as a new study from Harvard University highlights the current generation of cost-burdened older households, according to the head of Atlanta Neighborhood Development Partnership.

hive, condo, apartment

Millennials who defer buying a home by renting a place to reside are setting themselves up for future challenges to find an affordable home, some observers contend. File/Credit: Kelly Jordan

“Millennials have a housing gap,” said John O’Callaghan, president and CEO of the Atlanta Neighborhood Development Partnership, Inc., a non-profit created in 1991 that promotes and preserves mixed income communities in metro Atlanta.

O’Callaghan observed that as today’s millennials age in rental residences, they likely will forfeit three key aspects of buying a roof over one’s head at an earlier age:

  • The wealth-accumulating effect of real estate;
  • The potential for outright homeownership that would eliminate a mortgage payment;
  • The likelihood that housing costs will escalate over time – whether it be the rising price of a dwelling and the associated higher purchase price to be funded by a mortgage, or a rental payment that increases as property values escalate.

O’Callaghan pointed to the example of members of a generation that bought a house 30 years ago and were able to maintain ownership of that home or another. Today, these homeowners, who are in their older years, may well be free of a mortgage and responsible only for paying property taxes and insurance.

“Even if someone bought just 20 years ago, and is making the same mortgage payments valued at 20 years ago, the housing cost is a fraction of a new mortgage or a new rental payment,” O’Callaghan said.

Downpayment assistance and homebuyer programs can help at least some who want to purchase a home, O’Callaghan said. Programs are offered by entities including ANDP, Invest Atlanta, and HUD.

In addition, houses in some areas remain available in the range of affordable. But the market is moving swiftly as investors buy in these neighborhoods and begin creating the next version of the Old Fourth Ward.

almond parl, millennials

This house evidently was renovated in the past year. It was sold for $22,500 in October 2018 and now is on the market for $289,900. It’s located in the Almond Park neighborhood, west of the future Westside Park. Credit: georgia mls via zillow.com

Consider one case in the Almond Park neighborhood, located west of Mercedes Benz Stadium and the future Westside Park.

The two relevant numbers are $22,500 and $289,900, and the house at 989 Ridge Ave.

The first number is the sales price on Oct. 19, 2018, according to Fulton County real estate records. The second number is the current sale price, according to its listing on zillow.com.

Almond Park and other such neighborhoods may not be a buyer’s first choice. Nor do these areas address the shortage of affordable housing stock throughout the region that’s resulted from big investors buying so many dwellings and turning them into rentals. Nor does it offset the market’s decision to develop residences at higher prices, O’Callaghan said.

“We need more private sector players selling under $200,000,” O’Callaghan said. “That’s a gap for those region and those are issues we can address.”

Harvard’s study reached similar conclusions in regards to the current housing scenario faced by older folks: Those who own a home are in far better financial situations than those who rent or pay a mortgage.

The average housing cost was $458 a month for households age 65 and over who owned their home free and clear in 2017. That’s about half the $830 a month the housing cost of a same-age renter, and a third of the $1,310 a month cost for same-age owners with a mortgage, according to the study.

Grove Park, jery

As ‘vulture investors’ pay low-ball prices for properties in lower income neighborhoods, residents who stay in their homes – many of them senior citizens – struggle to pay the rising housing costs associated with ‘neighborhood renewal.’ File/Credit: Grove Park Foundation

This segment of the report ended with this observation regarding quality of life and family wealth:

  • “Moreover, homeowners build equity that they can access to fund their living expenses later in life or transfer to children.”

The study, Housing America’s Older Adults 2019, was released Oct. 17 as a supplement to The State of the Nation’s Housing Report, both by the Joint Center for Housing Studies of Harvard University.

Current woes facing the elderly include interior floor plans that accommodate mobility challenges and access to services for the aging. Harvard’s study foretells of the rising need for “affordable, accessible housing and in-home supportive services” as an estimated 18 million adults will reach their 80s within a decade, many on limited incomes.

The aging issue is of particular concern in metro Atlanta. A full 12 percent of the region’s population is to be aged 75 years or older by 2050, according to a recent forecast from the Atlanta Regional Commission. The region’s current proportion of folks of that age represents 4 percent, according to the ARC.

O’Callaghan’s observation provides forward-looking thoughts on the steady stream of reports about the millennial generation as an outlier among recent generations. Millennials tend to shoulder huge student debt, delay marriage, delay homeownership, and have an outlook that’s somewhat jaundiced from coming into adulthood during the economic ravage of the Great Recession.

The Urban Institute provides some of these reports. It’s latest look at the homeownership gap for millennials showed these two nuggets:

  • The homeownership gap is about 8 percent for all millennials, compared to two prior generations, Baby Boomers and Gen Xers;
  • The gap widens considerably for minorities. Within the millennial generation, the gap is 15 percent between whites and minorities, who have the lower ownership rates.

The report, Millennial Homeownership: Why is it so low, and how can we increase it?, was released in 2018 and updated in January. President Lyndon Johnson established the institute in 1968 to analyze anti-poverty programs.

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David Pendered
David Pendered

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow.

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8 Comments

  1. Avatar
    urban gardener October 22, 2019 9:57 am

    Not to nitpick, I bet it was spel check, but clothes are ‘sewn’ and seeds are ‘sowed’

    Hard to afford a house with all the lower value homes in the rental pool are being actively snarfed up by investors to turn to short-term (AirBnB-esq) rental. There was a sad piece on public radio over the weekend about the ‘home wreckers’ who bought up large swaths of foreclosures and jacked the rents after evicting tenants during the housing crisis; those same-type companies have bought up swaths of rental in Atlanta and have put in place onerous financial hurdles (exorbitant application fees of $300+, multiple months rent down payments, nutsy financial background checks and salary requirements, and then increased the rents to cover rising appraisals and make a tidy profit). End result is working families cannot afford the rents of the housing stock that remains, and are looking ever further out to places with no public transportation and so then spend forever in gridlock. This, in turn, cuts into the available pool of skilled employees, because to afford the rent they then cannot afford the transportation costs so re-jigger their job searching, as they may not be able to afford a second car.

    The short-term rental market is also driving prices up on surrounding residential properties. Properties that could not sell as a single family residence for the price asked, when gussied up a smidge and positioned as a short-term rental revenue generator, promptly sold at 30% over asking. Believe this was Westside but could have been Southeast.

    Small-scale investors are now in on the game, cobbling together as many rentals as they can in desirable neighborhoods, as well as reaching further into the gentrifying fringes to get “good deals” to flip into short-term rentals.

    Put the financial screws to the short-term rental market and it just might help not only the affordable housing issue but the homeownership issue as well.

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  2. Avatar
    Chris October 22, 2019 10:21 am

    Millenials did not set the stage. That was done by their elders who elected a series of Presidents and legislators who kowtowed to the financial sector, causing the cascade of near finance collapse, foreclosure and destitution for far too many. We need a President with a determination to make this country work for its citizens, not its financiers and stockbrokers.

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    1. Avatar
      brainstar8 October 22, 2019 11:02 am

      I agree. My extended family includes many millennials who are well-educated, dedicated parents and hard-working career people. The past four presidential administrations, including Trump’s, have helped design a consumer-driven society on steroids. For the record, this greed is also well-documented in a non-fiction book, The Chickens**t Club. detailing why and how Barack Obama and Eric Holder worked very hard not to indict the Wall Street titans and other finance king partly responsible for the financial collapse.

      Working to get ahead in life is admirable and gratifying, but simply acquiring stuff for the sake of show-and-tell is not. This lacks purpose. Maybe because the boomer generation was raised by people who endured World War II and the Great Depression, Boomers were driven to achieve. No blame for our parents. We’re the ones who over-did it.

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  3. Avatar
    Matt October 22, 2019 11:54 pm

    How on earth did Millennials “set the stage”? I read the executive summary of the report linked in the last paragraph, and the vast majority of the reasons for lower millennial homeownership they found are outside of one’s personal control. Preference for living in cities is really the only thing within our control. We cannot help the fact that we are more racially diverse, that we’ve been saddled with more student loan debt, that rents are out of control, or that job availability and compensation makes it nearly impossible to save for a down payment.

    I am a millennial who owns a home and consider myself very lucky to have been able to do so. But it’s irresponsible for a journalist to suggest that the lower rate of homeownership among my generation is purely because we just like living in cities or don’t want to put money into savings.

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  4. Avatar
    Alan October 23, 2019 10:37 am

    At TaxFence, we have data that shows nearly 40% of the homes are mis-valued by the assessment cama system in Fulton and Dekalb. This misevaluation (or overvaluation) is also causing a trickle down on the home owners to the renters. Homeowners need to appeal, and really look at their valuations that can help keep costs down in the markets. And this is everyone’s responsibility, boomers, xers, and millennials.

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  5. David Pendered
    David Pendered October 23, 2019 12:14 pm

    Thank you for your close read of the story.
    The correct verb is now in the first paragraph. The error was of my making.
    Eight paragraphs were added to name some assistance programs for homebuyers and to highlight the notion that some houses remain affordably priced, though perhaps not in highly desirable neighborhoods. This new information is located in the story near a photo of kitchen in a house that evidently has been renovated.
    This dwelling, located west of Westside Park, sold in October 2018 for $22,500, evidently was renovated, and now is priced for sale at $289,900.
    Best,
    David

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  6. Avatar
    Ncr October 25, 2019 11:29 am

    “We need a President with a determination to make this country work for its citizens, not its financiers and stockbrokers.”

    It will never happen. Wall Street owns us. Always have, always will. Any whiff of negative vibes and they’ll throw the economy into such a fit, that President won’t have a chance of surviving.

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  7. Avatar
    Ed October 25, 2019 2:45 pm

    Better headline: “Boomers setting stage for affordable housing woes for all future generations.”

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