Americans age 65 and over are holding onto home ownership instead of downsizing into rentals or moving to senior centers, Bloomberg Businessweek reports.
Indeed, the largest jump in buyers this year was among people between the ages of 65 and 74. This age segment increased to 13 percent of all buyers from 10 percent a year earlier, according to National Association of Realtors data.
“They want to remain as home owners now because it represents stability, so they don’t have to deal with generating fluctuating payments for rent,” says Chris Mayer, a real estate professor at Columbia University Business School in New York.
Even during the housing crisis, the home ownership rate for Americans 65 and over stayed around 80 percent while it dropped for every other age group, according to Census Bureau data. Since then, Americans under 35 have seen the largest decline in home ownership, falling to 36 percent from 48 percent, Census data shows.
In 1982, the home ownership rate for every age group was higher than it was in 2013 — except for those 65 and over.
“This group has been a ballast for the market,” says Chris Herbert, acting managing director at Harvard’s Joint Center for Housing Studies. “If not for them, we would have seen a much lower home ownership rate overall, more homes on the market, and more weakness.”
Seniors usually have less mortgage debt than younger home owners, greater wealth than they had four years ago, and longer lifespans than previous generations, Bloomberg Businessweek reports. For those aged 65 to 74, their median net worth rose 5 percent to $232,100, which is the largest gain for any age group from 2010 to 2013, according to the Federal Reserve’s Survey of Consumer Finances.
“They have a quadruple bonus: They benefited from real estate, the best in equity and bond returns, plus higher GDP per capita growth well before the crisis during the 1980s and 1990s,” says Amlan Roy, head of global demographics and pension research for Credit Suisse Group AG’s investment bank in London. “It’s unlikely to repeat.”
While older Americans are staying in real estate, they are carrying more mortgage debt than previous generations, according to the Consumer Financial Protection Bureau. In 2010, about 40 percent of those over 65 were still making house payments compared to more than 70 percent of those 50 to 64, according to a report earlier this year by the Joint Center for Housing Studies.