Thursday, September 11, 2014

New Data Shows a Growing Wealth Divide in the U.S.

by Dan McCue
Research Manager
Last week, the Federal Reserve released its 2013 Survey of Consumer Finances, a triennial survey which gives a rare, detailed look at the assets and debts as well as incomes of households across the nation. In the months to come, the Joint Center will delve into these data to assess the financial status of households with a particular emphasis on the association between homeownership and household wealth and the implications of consumer debt for future trends in the housing market. But in the meantime, the following are some early findings on household wealth pulled from a quick look at the Federal Reserve’s summary of net worth by various household characteristics.

Low-Income Households Lost Wealth, While High-Income Households Held Their Ground Between 2010 and 2013, low-income households had substantial declines in real net worth, while higher income households reported modest gains. The greatest declines were felt by households in the bottom income quintile, where the average net worth dropped by 21 percent.  Meanwhile, the average net wealth for the top 10 percent income group increased by 2 percent.

The Typical Renter Still Has Very Little Net Wealth
Median net worth for all renters remained unchanged in 2013 relative to 2010, at just $5,400.  This is just a fraction of the median net worth of the typical homeowner, of $195,400, which increased by 4 percent in 2010-13.  In fact, the real increase in median net wealth of owners alone between 2010 and 2013 ($8,400) exceeded the total median net wealth of renters in 2013 by over 55 percent. 

The White/Minority Wealth Gap Expanded
The net worth of the typical white household increased by 2 percent over the past three years, while that of the typical minority household (non-white or Hispanic) dropped fully 17 percent.  This extended the gap in median net wealth between the two groups ($142,000 vs. $18,100).

It Helps to Have a College Education
Looking at the changes in wealth by education level, we see that the median net worth for a household headed by a person with a college degree increased 5 percent in 2010-13.  Meanwhile, the median net wealth of those with only a high school diploma or just some college fell by 14 percent.

Overall, Households Have Lowered Debt Costs
Median debt, including mortgages and all forms of consumer debt, declined 20 percent between 2010 and 2013.  Fewer families have high debt payment to income ratios (above 40%) than at any time since 2001.

Fewer Families Held Home Mortgages, and the Average Mortgage Level Declined
Exceeding the decline in homeownership rates during the period, the share of owners with mortgages declined from 47.0 percent in 2010 to 42.9 percent in 2013.  Furthermore, the average amount of mortgage debt also dropped by 5 percent. 

Higher Shares of Young Households have Student Loan Debt and the Typical Level of Student Debt Held is Rising
The share of households with student loan debt rose again in 2013 to reach an even 20.0% of all households.  Over a longer span of time, the increase in share has been significant – particularly for the young.  For those under age 40, the share with student loan debt is up from 22.4% in 2001 to 38.8% in 2013. During that same time period, the average level of student debt held by younger households also grew from $16,900 in 2001 to $29,800 in 2013 – while the median amount that the typical young household owed rose from $10,500 to $16,800.   

All told, the portrait that emerges from these data point to a continued widening of the wealth divide in the country by income, race/ethnicity, and education. And while there has been some improvement in the overall consumer debt load, the sharp rise in student loans is a real cause for concern for the ability of young adults to be able to afford to buy homes in the future.  Stay tuned for further analysis of this rich data source. 

Wednesday, September 10, 2014

INTERACTIVE MAP: The U.S. Population Has Aged Significantly Over the Past Two Decades

by Elizabeth La Jeunesse
Research Analyst
The older adult population has grown tremendously since the first of the baby boomers (born 1946-64) turned 50 in the mid-1990s. Between 1990 and 2010, the number of people 50 and over jumped by 35 million, an increase of 55 percent. This dramatic increase can be seen across US counties on the interactive map published as part of our new report, Housing America’s Older Adults. As the map shows, the share of population 50 and older grew substantially across the U.S. during the last two decades. In 1990, about 1 in 20 counties had a population where older adults made up 40 percent or more of its residents. These counties were mostly sprinkled throughout the Midwest and Florida. By 2010, however, that number had multiplied to around 1 in 3 counties, spread mostly across the Northeast, along the Canadian border, and into the West.

Click map to launch.  (May take a few seconds to load.)



The number of counties where half or more of the population was 50 or older also grew markedly—by a factor of more than ten—over this period. These counties can be seen in states across the nation, including Michigan, North Dakota, Texas, and Florida.

As detailed in the report, older adults all over the U.S. face a number of challenges including increasing risks of disability, isolation, and financial stress. The pressures on rural areas are particularly acute, given their larger older populations and the limited availability of services and housing options. The report documents many areas for action at all levels of government to ensure that older households are able to obtain affordable and accessible homes with the ability to remain connected to their communities and to receive needed long-term supports and services in their homes. But much of the responsibility for following through on these actions will fall on the local communities. As the map illustrates, the demand for housing to accommodate the aging population will be evident in a broad swath of communities across the country.

Tuesday, September 2, 2014

Housing America's Older Adults: New Report & Infographic

This week, the Joint Center released its new report, Housing America's Older Adults—Meeting the Needs of an Aging Population. According to the report, America’s older population is in the midst of unprecedented growth, but the country is not prepared to meet the housing needs of this aging group. The number of adults in the U.S. aged 50 and over is expected to grow to 132 million by 2030, an increase of more than 70 percent since 2000. But housing that is affordable, physically accessible, well-located, and coordinated with supports and services is in too short supply.

Read the full report online, or click the image below to see & share an eye-opening infographic about the report.


Thursday, August 21, 2014

Older Homeowners Want to Age in Place but Aren't Focused on Accessibility

by Abbe Will
Research Analyst
With many baby boomers reaching retirement age this decade, a major shift in the age distribution of U.S. households is underway. According to recent Joint Center projections, the number of householders age 65 and over is set to increase by 9 million from 2010 to 2020. Many of these older adults will choose to remain in their current homes and “age in place” while others will look to move into homes that are better suited to their changing needs. New survey data from The Demand Institute—a joint venture between The Conference Board and Nielsen—sheds light on homeowner attitudes toward aging in place and accessibility needs, including major motivations for upcoming remodeling projects. This extensive survey, fielded in the summer of 2013, asked households about their housing attitudes, household finances, major household purchases, community and commuting, future moving intentions, housing and neighborhood needs, and home improvement plans and motivations.

A preliminary analysis of the Demand Institute’s consumer housing survey data indicates that older homeowners do not consider aging in place and home accessibility as going hand in hand. Although the vast majority of homeowners age 50 and over report that being able stay in their home as they age is very important (88 percent ranked this statement 8, 9, or 10 on a scale of 1 to 10, where 10 is extremely important), less than 35 percent of older owners place the same level of importance on having a home that is accessible to persons with special health needs or disabilities.

Indeed, 7 out of 10 older homeowners do not have any plans to move in the future, meaning they intend to age in place. But even among those who do plan to move at some time in their later years, only 36 percent cite accessibility as an important characteristic of their next home. This is a meaningful statistic given that the 2011 American Housing Survey estimates that almost 30 percent of older homeowners have a disability or significant difficulties doing typical activities around the home without assistance, which would indicate some need for home accessibility features. The share of homeowners with disability or impairments rises dramatically with age to 46.4 percent of homeowners age 70 or older.

Unfortunately, older homeowners are largely not focused on accessibility needs as part of aging in place. While 45 percent of older owners report being somewhat or very likely to do a major remodeling project (costing $2,000 or more) on their primary home in the next three years, few of them are likely to list “accommodating health needs” or “making the home easier to live in as they age” as major reasons for their next renovations. Only 8.0 percent of homeowners age 50 and over who plan to do a major remodeling project in the next three years plan to do so to accommodate the health needs of someone in the household, and only 15.3 percent want to renovate specifically to make their home easier to live in as they age. Even those older owners reporting that accessibility is important to them are not much more likely to cite accessibility (16.0 percent) and aging in place (23.4 percent) as major reasons for upcoming remodels.


Notes: Major renovations are defined here as costing $2,000 or more.  Homeowners placing high importance on accessibility ranked having a home that is accessible for people with special health needs or disabilities as 8, 9, or 10 on a scale of 1 to 10 where 10 is “extremely important.” Source: JCHS tabulations of the Demand Institute’s 2013 consumer housing survey data.

Certainly as the number and share of older households increase significantly in the coming decades, the demand for homes with accessibility features for safely aging in place will also grow substantially. Yet, given the attitudes of today’s older homeowners, the remodeling industry will need to bridge a significant gap between owners wanting to age in place and being able to do so safely with appropriate accessibility features.



On Tuesday, September 2, the Harvard Joint Center for Housing Studies and AARP Foundation will release a new report, Housing America's Older Adults—Meeting the Needs of An Aging Population, which will look at these and other issues affecting America's aging population.

Join us for the live webcast at 11:00 a.m. (Eastern) on September 2, and follow the conversation on Twitter with #housing50.

Thursday, August 14, 2014

What is Affordable Housing & What Does it Mean to Preserve It? (Five New Case Studies)

by Alexander von Hoffman
Senior Research Fellow
Even people in the housing field are not always sure what affordable housing is, and what it means to preserve it. Generally speaking, “affordable housing” connotes any privately owned dwellings that low-income people can afford to rent, and is distinct from public housing owned by government agencies.  Most often, however, people use the term to signify properties whose owners received government subsidies to help reduce the rents.

To “preserve” affordable housing means to save financially or physically endangered properties, usually by renovating and refinancing them, so that low-income tenants can still live in them. Starting in the 1960s, the federal government implemented a series of programs that gave private developers various incentives to develop and run low-income rental housing.  But these incentives – whether low-interest mortgages, rent supplements, or tax credits – all have time limits, and each year since the mid-1980s tens of thousands of them have expired, eliminating a large portion of the low-income housing stock. In addition, many of these properties have suffered the ravages of time, and required a large injection of capital to keep them habitable.

But definitions are a bit dry.  It’s more interesting to come face to face with actual projects and try to understand how they came to be developed and preserved.  I recently had the opportunity to investigate local efforts by nonprofit organizations to preserve affordable rental housing in the cities of ScrantonAshevilleChicago, Roseville, MN, and Boston.

The first question that occurred to me was: what do these places look like?  Most of us have a sense of public housing – usually a negative image of a dilapidated high-rise in an inner-city neighborhood – but few can picture subsidized housing for low-income people.

In fact, affordable rental housing, both subsidized and unsubsidized, comes in a wide variety of types, locations, and conditions.  Yes, such housing can be found in poor, inner-city neighborhoods, but unlike public housing, much of it is also located in downtowns, middle-class neighborhoods, and suburbs. Most subsidized rental properties exist in multifamily structures, but they may take the form of traditional urban apartment buildings, modern-looking low-rise suburban-style complexes, or even elegant former hotels.


Franklin Park Apartments, Boston, MA

The origins of affordable housing projects, I discovered, vary as well.  Some were existing privately owned rental properties that were converted with the help of government subsidies. In Boston, for example, in the 1970s, an idealistic African American city planner began restoring old apartment buildings to halt the physical deterioration of the minority neighborhoods. In Chicago, community activists, alarmed at the disappearance of single-room occupancy hotels, acquired and restored a decaying apartment building to create healthy homes for those who would otherwise live on the street.

In other cases, a private developer conceived and built low-income rental housing from scratch. In 1973 a California company developed Skyview Park, a compound of one- and two-story brick buildings containing 188 one- to three-bedroom apartments, in Scranton, Pennsylvania. The developer used a government mortgage subsidy for moderate-income residences and later acquired project-based rent subsidies, which allowed very low-income tenants to live there.


Skyview Park, Scranton, PA

Contrary to stereotypes of the poor, the tenants of affordable rental housing are a diverse lot.  Often they reflect the character of the low-income population of the area in which their housing development is located. Hence, if many poor immigrants, homeless, or elderly live in an area, they will be heavily represented in the local affordable housing population.  Asheville, North Carolina, is a popular retirement community, and a large portion of the tenants of Battery Park Apartments (an elderly housing project located in the heart of the city) are poor people who, like many other city residents, came to Asheville to retire.

In contrast, some affordable housing projects function as entry points for low-income newcomers to an area. In Scranton, for instance, some 60 percent of the poor are white, but, due to a recent surge of Hispanic migrants to the area, some 70 percent of the residents of the Skyview Park development are Puerto Rican or from other Hispanic regions. The housing development has also attracted Bhutanese immigrants from Nepal, who have only just begun to arrive in Pennsylvania.

Different circumstances dictate when and why owners will go about preserving properties for low-income tenants.  Sometimes the buildings have fallen into such miserable condition that they become imperiled. In the town of Roseville, a suburb of Minneapolis-St. Paul, the aging owner neglected a modest apartment complex built years before, and the deteriorating property attracted abandoned cars and illicit activities.  A prominent Minneapolis nonprofit housing organization, Aeon, bought the property, restored its 120 small apartments, and for good measure added a new building with fifty family-size units.


Sienna Green Apartments, Roseville, MN

The situation became far worse at Scranton’s Skyview Park, which in the 1990s earned a fearsome reputation for drug dealing, shootings, and stabbings, not to mention apartments with gaping holes in the wall. When National Housing Trust/Enterprise Preservation Corporation and Evergreen Partners finished renovating Skyview Park in 2009, they had not only preserved it but they had also made it a safe place to live.

Other circumstances are not as dire but nonetheless urgent.  In 2006 Mercy Housing Lakefront in Chicago acquired Malden Arms Apartments as part of a merger with its nonprofit owner, only to discover that the building was undercapitalized and under-maintained.  Sky-high utility bills resulting from old and inefficient water and heating systems were financially bleeding the Malden Arms’ balance sheet. In addition, the property’s federal low-income housing tax credits were due to expire.  Although some urged a sale of the property, MHL successfully sought ways to refinance and renovate the Malden Arms.


Malden Arms Apartments, Chicago, IL

Fortunately for these projects, state and local government officials strongly supported the cause of preserving affordable housing.  State housing finance agency officials were crucial because they allocated federal low-income housing tax credits, which typically provide the bulk of underwriting for low-income housing projects.  Because officials wanted to see these properties maintained for low-income tenants, they advised the developers about ways they might tailor their proposals to meet state criteria for tax credits.

In Pennsylvania, state housing officials suggested that the out-of-town developers involve a local civic leader who supported housing and whose word city officials trusted.  In the case of New Franklin Park Apartments in Boston, housing finance officials enlisted the developer, The Community Builders (TCB), to acquire and preserve the project.

Battery Park Apartments, Asheville, NC
Once funding and financing are secured, however, actual renovations to low-income housing can be almost as complicated as garnering support. In Asheville, National Church Residences (NCR) took over a building fully occupied by elderly tenants, who were extremely anxious about the renovation plans of a new landlord. In addition to holding frequent meetings with residents and distributing a reassuring informational flyer, NCR and its construction company minimized the disruption by moving tenants to furnished hospitality units while their apartments were being remodeled.  At New Franklin Park Apartments in Boston, TCB faced an even more complicated problem of rehabilitating apartments (and temporarily moving their tenants) in a scattered property consisting of fifteen buildings at a dozen sites.

Some groups added another dimension to their renovation projects by using them as an opportunity to implement sustainable development.  In Roseville, for example, Aeon worked with experts from the University of Minnesota to install energy-efficient appliances, effective ventilation systems, and a storm water management system that created an attractive landscape of plantings and pools that also filtered rain water.

At a time of skyrocketing housing costs, preservation of affordable housing provides low-income people with a reasonably priced place to live, and at less expense than building new dwellings.  The idea of affordable housing preservation seems relatively simple.  I discovered in the course of my research, however, that the actual projects, people, and processes involved in carrying it out are intriguingly complex and varied.  It is my hope that this work will inspire others to take a closer look at this important part of America’s social safety net.