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.
“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.
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.
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.
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.
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.”
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.