by George Masnick Fellow |
The aging of the United
States population is dramatically shown in Figure 1. Between 1970 and 2010, most adult population
growth took place in the under 65 age groups.
Starting in 2010, aging baby boomers begin to shift most of the
population growth to the over 65 age groups.
Each decade during the past 40 years (the leading edge of the baby boom,
those born 1946-1955) has provided the biggest share of population growth of
any 10-year age group (lower panel of Table 1 cells highlighted in
yellow). In the 1970s, baby boomers
created growth among young adults, gradually shifting the growth to older and
older age groups in successive decades.
The dominance of baby boomers in the population growth equation will
persist until sometime after 2030 when they begin to reach the end of their
lives in large numbers.
Source: Decennial Census counts and 2012 Census Bureau middle series population projections.
Many are quick to
conclude that, since population growth drives most of the demand for new
housing construction, we must primarily build for the elderly. The problem with this logic is that elderly
population growth does not represent new additions to the population, and most
elderly are already housed quite comfortably and show little inclination to
move to a different residence. Strong elderly population growth is simply the
aging of a large cohort replacing the smaller cohort that came before them -
they are not new people entering the housing market. As I’ve discussed in a previous post, for the remainder of this decade and the next, elderly baby boomers
will largely age in place. Fewer than 4
percent of the population over the age of 65 changed residence in 2012-13. Over 80 percent of the elderly live in owner-occupied
housing. For those 65+ living in
owner-occupied housing, the annual mobility rate is now about 2 percent.
As I mentioned earlier,
movers can be thought of as driving the demand for new housing since non-movers
by definition stay in their current homes.
While the number of people over age 65 is growing rapidly, given the
very low mobility rates of this population the number of movers that are
elderly will still be small. Multiplying
the average size of each 10-year age group of adults (upper panel of Table 1)
by the average percentage who change residence each year will give the annual
number or persons in each age group that are expected to move over the
decade. In the 2000-2010 decade, these
movers, or recent occupants, were clearly dominated by young adults age 25-34
(Figure 3). This cohort does not have
the largest population; it is about 5 million less in number compared to the baby boomers age 45-54 in 2010 (upper panel of Table 1). But at over 40
million, its size is substantial. Having
the highest rate of geographic mobility, 25-34 year olds accounted for almost
three times as many recent occupants during the 2000-2010 decade as the largest baby boom cohort. Each year during that
decade, persons over the age of 65 averaged only 6.2 percent of total moves
(8.5 percent in 2013). Such low
representation of the elderly among movers will persist for the foreseeable
future. That share is projected to increase only slightly during the next two
decades to an average of about 10 percent in 2020-2030 in spite of the large
projected growth in the 65+ population.
Note that these projections likely bias upward the estimates of demand
for new market housing by the elderly because the resident population used as a
base in the projections include the elderly living in nursing homes and prisons.
Notes: Recent Occupancy numbers = average
number of persons in age group during decade x average annual age-specific
annual mobility rate. Number of persons
is average of numbers at beginning and end of decade. Average annual mobility rate is the mean of the age-specific
rates at the beginning and end of decade. Projections hold mobility rates
constant at 2013 levels.
Source: see Table 1 and Figure 2.
In keeping with their
lower mobility rates, older adults are underrepresented in newly built
housing. Households over the age of 65
in 2011 accounted for 22.1 percent of all households, but just 14.4 percent of
occupants of units built since 2000 (Figure 4).
Among all owner heads of households, 26.9 percent were over the age of
65, but just 14.7 percent were heads in owner units built since 2000. However, older households do account for a
larger share of heads of households living in new rental units: 13.4 percent of
renter heads are elderly, nearly equal to their 13.6 percent share of occupied
rental units built since 2000. This
greater parity in representation of the elderly in newer rental units is
consistent with the higher mobility rates of older renters compared to older
owners.
As the large baby boom
cohorts age into the 65+ age groups, will they increase the share of elderly
who live in newer housing? An increase
proportional to their growing share of the adult population (adjusted for their
lower mobility rates) is certainly expected.
For example, according to recent Joint Center household projections, the
elderly accounted for 23.3 percent of all households in 2014, increasing to
26.4 percent in 2020 and to 31.5 percent in 2030 when all baby boomers are over
the age of 65. If the elderly maintain
their share of households living in newer units at current levels, about 20
percent of newly built units in 2030 will be occupied by heads over the
age of 65. But to increase the share of
newly built housing occupied by the elderly significantly above that figure,
tomorrow’s elderly will need to relocate out of older housing at higher rates
than we now observe.
No comments:
Post a Comment