Over the past year, the housing market has seen incredible growth. With record low interest rates, more people were getting new mortgages and refinancing their homes. However, studies are now finding that this rapid growth is shutting some consumers out of the housing market.
The Senate Committee on Banking, Housing, and Urban Affairs chair and ranking member have released statements addressing the problem of senior-aged homeowners and buyers being forced out of the market. The committee recently held a hearing entitled “Affordability and Accessibility: Addressing the Housing Needs of America’s Senior.”
In the opening statement from Sen. Sherrod Brown (D-Ohio), the committee’s chair, he noted that one of the largest generations in U.S. history, the baby boomers, are getting older; and by 2040, more than one-in-five American’s will be over the age of 65. Since 2017, approximately 10 million seniors were using more than 30 percent of their income on housing, with almost half of that number using over 50 percent. This issue, Brown contends, has only worsened as home values are seeing record increases.
Sen. Pat Toomey (R- Pa.), ranking member of the Senate committee, called out what he perceives as one of the greatest causes of housing unaffordability: government interference and regulation.
“In the last 16 months, Democrats and the administration dropped hundreds of billions in helicopter money to stimulate an already strong economy,” Toomey said. “Eighty billion dollars went to rental assistance, vouchers, and other housing subsidies. And that’s above and beyond the hundreds of billions in ordinary housing subsidies we spend every year. Despite record demand, the Fed continued to hold mortgage rates down at near record lows.”
Toomey said senior homeowners leaving their larger homes for apartments, mother-in-law suites, or smaller homes, are part of the natural turnover of the housing market. By placing that larger home on the market, it allows for a new family to grow in that same space. Toomey contends this turnover is also an important part of keeping home prices down as it keeps a steady rotation of such a scarce resource on the market.
A recent Zillow study also found female buyers are also being shut out of a substantial portion of the housing market. The study found women are shut out of approximately 18 percent of the housing market due to the disparity in average pay between men and women. This study was done in conjunction with “Equal Pay Day” which is the date each year in which working women will have made the same amount on average as men did during the previous calendar year.
The study analyzed the average home equity held by and affordable to men and women in 13 different industries to determine access to homeownership. In all but one of the 13 industries, which included financial services, construction, education and health services, and leisure and hospitality, a disparity between men and women’s overall home affordability share ranged from 7.4 percent (mining and logging) to 21.5 percent (financial activities). The only industry in the study which saw equal overall home affordability was construction, where 47.9 percent of men and women in the industry could afford a home.