The Future of American Households, and What That Means to Seniors (Part 1)

Originally published by Evolve

Between 2020 and 2040, almost all growth in home ownership rates will occur among older households, with huge financial, demographic, and policy implications coming along with that growth.

That’s according to the Urban Institute, which recently released a report, “The Future of Headship and Homeownership,” that examined data from the 1990. 2000, and 2010 U.S. censuses, supplemented by historical figures and data from the American Community Survey (ACS), an annual survey with a sample size of 3.5 million.

The policy implications of these shifts in homeownership rates are vast, including better supporting the large number of both renting and home-owning elderly households, because most seniors want to live independently in their homes as long as possible.

This month and next month, we will examine the Urban Institute report, what these trends might mean to those wishing to age in place, and the ways our society could change as a result. In this post, we’ll look at the report’s findings, and next month, we’ll look at policy and societal changes that could occur if these trends come to pass.

First, a bit about the Urban Institute: this research organization has, for 50 years, aimed to develop “evidence-based insights that improve people’s lives and strengthen communities,” according to its web site. The institute is known for its rigorous analysis of complex social and economic issues and provides advice to help policymakers, philanthropists, business leaders, and others make effective decisions.

The current report, funded by a grant from the Wells Fargo Foundation, takes a deep dive into population and demographic data to make projections about the future of households and home ownership in America through 2040. The projections take into account the impact of possible policy changes, as well as what may happen if few or no changes or reforms are made.

The report also looks at historical patterns, noting that in 1940, 76 percent of households were headed by married couples. By 1980, that number had decreased to 58 percent, with non-family households (roommates and other non-related people living together) increasing significantly in that time. This trend reflected a decline in the marriage rate and increases in life expectancy, the divorce rate, the age at which people marry, and the number of non-related people living together.

Another historical trend in housing is that non-white people have historically been unable to achieve homeownership at the high rates of white people in the United States. The report states, “Current homeownership rates show a large and growing gap by race and ethnicity: 72 percent of non-Hispanic white households owned homes in 2018, compared with 57 percent of Asian households, 48 percent of Hispanic households, and 42 percent of Black households. Notably, the current homeownership rate for Black households is even lower than it was when fair housing laws were passed in 1968.”

Since 1980, the “headship rate”—the number of people counted as heads of households—has declined across all societal groups besides people 85 and older. This is puzzling at first glance, because several of the trends mentioned earlier have continued: more and more people are marrying later and later in life, or not marrying at all. However, other trends have slowed or reversed: for example, the divorce rate has declined significantly since 1980.

And more recently, increasingly large numbers of people aged 25 to 34 are living with their parents or other older family members, a trend that holds true across all racial groups. In addition, after a long, slow decline in the average number of people per household, that number has been ticking upward since about 2010, a trend that is expected to continue, along with a rise in the number of people living with non-family members, like roommates.

But although the projections show declines in headship across most age groups, there will be increases—but only among older adult households. This group is projected to see an increase of 16.1 million households by 2040, with about 40 percent of those being renters. Numbers of older Black and Hispanic renters, in particular, will see particularly large increases.

Obviously, these numbers have significant implications both for current seniors and for those who will age into that population group over the next 20 years. Homeowners have a significant wealth advantage over renters, but much of their “wealth” is concentrated in their homes. This is particularly true for non-white senior homeowners, whose homes represent between 60 and 70+ percent of their total wealth.

In addition, homeowners are often more free to adapt their homes to help them age in place, while renters may face restrictions on their ability to alter their living spaces. In addition, seniors with fixed incomes may struggle to keep up property taxes and maintenance on their homes even as they are determined to continue to live in them.

Clearly, seniors of today and tomorrow need answers, and most likely policy changes, to help them continue to live independently. The Urban Institute has identified what likely lies ahead for Americans with regard to housing. Next month, we’ll look at some ideas for policy and practice to help all Americans, and seniors in particular, age well and independently regardless of their household status.

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