Preserving Homeownership for Seniors: Addressing the Elder Housing Crisis

The population of those aged 65 and older has risen at historic rates, increasing by 34% from 43 million in 2012 to 58 million in 2022. At the end of 2022, 79% of these older Americans were homeowners. But, as homeowners age, they’re increasingly confronted with financial challenges that threaten their ability to maintain and afford their homes.

A 2023 report from the Joint Center for Housing Studies of Harvard University revealed that nearly 11.2 million older adults spent over 30% of their household income on housing in 2021, a rise from 9.7 million in 2016. Rising property taxes, insurance premiums, along with difficulties in accessing home equity, are creating financial instability for some older adults—especially low-to-moderate-income elders on fixed incomes. Further compounding these challenges are increasing healthcare costs and daily living expenses, leaving many older adults in precarious housing situations.

Rising Property Taxes Represent a Growing Burden for Older Homeowners

The surge in real estate values by 40% between 2019 and 2023 has caused the median single-family property tax bill to rise by 24%. For low-to-moderate-income older Americans who want to age in place, many are living on limited fixed retirement incomes; rising property taxes are consuming a larger portion of their budgets and making it difficult to afford other necessities like healthcare, utilities and groceries.

Property Tax Relief for Seniors

Most states offer relief from property taxes for senior citizens. The types and extent of property tax relief can vary significantly from state to state and even between local jurisdictions within a state. Eligibility criteria, such as age, income, and length of residency, can also vary widely. AARP has compiled available programs for each state, which they report can save seniors $200 to $6,000 yearly.

The Impact of Skyrocketing Insurance Premiums on Fixed Incomes

Home insurance costs are another growing financial burden for older homeowners. As of July 2024, home insurance premiums rose to an annual average of $2,511. Worse, experts predict a further 10% to 15% increase in home insurance, putting even more strain on household budgets.

The rising insurance premiums can compromise homeowners’ ability to cover necessary repairs and maintenance—requirements for keeping insurance coverage in place under most policies. Loss of insurance coverage can then lead to foreclosure.

Help for Seniors to Pay for Insurance

Regularly reviewing and updating the policy to reflect any changes in home value or personal circumstances can ensure seniors are not overpaying for home insurance.

In addition, AARP provides its members with discounts on home insurance through partnerships with insurance providers.

For more information, check resources like The Realtor and National Council on Aging.

Older Adults Face Barriers to Accessing Home Equity 

While rising home values mean home equity for older adults has risen significantly in recent years, accessing their home equity is not always straightforward. 

Federally insured reverse mortgages, known as Home Equity Conversion Mortgages (HECMs), are by far the most popular option for this type of mortgage. HECMs are FHA-insured reverse mortgages that allow eligible homeowners aged 62 and older to convert a portion of their home equity into cash. HECMs work by providing borrowers with funds while they continue to live in their homes, as long as they keep up with property taxes and homeowner's insurance.

Other methods of accessing home equity, such as cash-out refinancing or home equity lines of credit (HELOCs), have become less accessible as interest rates have increased. In addition, homeowners often do not qualify for refinancing because of their usually lower post-retirement incomes. 

How Seniors Can Safely Access Home Equity

Before considering an HECM, seniors are strongly encouraged to talk to a HUD-certified housing counselor to discuss options relevant to the homeowner’s situation.

Additionally, the National Council on Aging has compiled data and resources for seniors on how to safely access the equity in their homes.