Homeownership may be a dream for the young, but for the elderly it’s a reality. In fact, eight of 10 older households — about 17.2 million seniors — own their own residence, according to the 2000 U.S. Census.
Perhaps because they have a valuable asset, homeowners are generally thought to be well off and more than able to take of themselves. And, of course, many senior homeowners can afford to live comfortably in their homes and maintain them. But according to a new study, another group of often overlooked seniors struggles to keep their houses.
Many older homeowners face serious problems, said Stephen Golant, the study’s author. Low monthly incomes don’t cover expenses, not to mention necessary repairs. Added to that are rising real estate taxes and energy costs.
“There is every reason to expect that these problems have expanded over the last three years,” said Golant, a University of Florida geography professor, who studies senior housing issues and is an affiliate of the Center for Gerontology at the school in Gainesville.
About 44 percent of senior homeowners are poor (defined as those with an income less than 50 percent of the area’s median), Golant said. And about half of these poor senior homeowners spend as much as 50 percent of their monthly income on housing costs.
If there were any doubt that some senior homeowners are poor, Golant points to the fact that 29 percent of new residents in government subsidized buildings for seniors moved there from houses they owned.
Another problem documented by Golant’s study is that many seniors own homes that need repairs, or modification. Nationally, 29 percent of all older homeowners occupy houses built before 1949, those at greatest risk of needing repairs. Golant suggests that older, unrepaired houses contribute to poor quality of life for seniors as well as to a general decline of neighborhoods.
Golant’s study challenges a widely held belief that all homeowners can tap home equity to improve their standard of living. “A significant share of older homeowners are cash poor and house poor,” he said. About 1.5 million seniors own houses worth less than $40,000. “This is a substantial group of people,” he said. “But they are really off the radar screen.”
Even seniors who have a substantial amount of home equity face problems, Golant said. Owners have benefitted from the quick increase in home values the last few years, but property taxes and utility bills are rising too. At the same time, interest rates have remained low, cutting into investment income that many seniors rely on to pay their bills.
Common solutions offered to senior homeowners fall short, according to the study. For example, the reverse mortgage, a loan that converts home equity into cash, has big upfront costs. “The reverse mortgage also conjures up negative reactions among older people,” Golant said. The fact that only 20,000 reverse mortgages are made a year is proof the product needs “tweaking,” he said. “It really hasn’t been a viable alternative for many older homeowners.”
So why not sell the house and live on the proceeds? “It would be irrational,” Golant noted. He explains that a house is considered an exempt asset under Medicaid, the government program that pays for nursing home care for the poor. That means seniors who sell a house would have to include the proceeds as an asset, which could disqualify them for Medicaid coverage. By keeping a house, seniors shelter their assets.
Programs are available to help senior homeowners, but there’s mixed evidence of their success, according to Golant. “Some people don’t take advantage of the programs; others aren’t aware of the programs. We don’t really push them,” he said.
Others agree that programs for older homeowners are underutilized. “People need to get proactive,” said Becky Lerfelt, executive director at PLOWS Council on Aging, a social service agency based in Palos Heights that helps seniors in the southwest suburbs. “Why starve if you’re sitting in a $350,000 house?”
She recommends the state’s tax deferral program, but admits many seniors are “scarred” by it. The program allows seniors to defer their property taxes until the house is sold, or the homeowner dies. (March 1 is the deadline to sign up this year.)
Lerfelt also suggests that seniors take part in the “Benefits Check Up” screening program. Seniors fill out a lengthy questionnaire (available at senior service agencies) about their life situations. Questions cover items such as income, health and housing. A computer prints out a list of programs and benefits for which the senior is eligible.
But Golant believes not enough is being done to help seniors. “Housing for older people is not a hot topic,” he said, noting the government’s current focus on the economy and homeland security.
More programs, especially those for very-low-income seniors, could help, Golant said. His study includes 25 housing reforms. But he also wants policymakers to question their assumptions about homeownership.
“Aging in place is not always a desirable alternative,” he said. Many seniors live in houses that are hard to navigate or rundown. “The bottom line is that unless you have dedicated adult children who are conscientious and thoughtful,” Golant said, “then aging in place is a not an easy proposition.”
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Jane Adler is a Chicago-area freelance writer. If you have questions or information to share regarding housing for senior citizens, write to Senior Housing, c/o Chicago Tribune Real Estate Section, 435 N. Michigan Ave., Chicago, IL 60611. Or, e-mail realestate@tribune.com
