Ballard Spahr 2018 National Housing Symposium November 9, 2018 Session Four: Housing Trends Across Age Groups and Income Brackets Edward Seiler, Ph.D. VP, Research and Economic Analysis National Housing & Rehabilitation Association eseiler@dworbell.com 202-939-1795

Homeownership rates bottomed out in 2016 and are ticking up Household Income ≥ Median 65+ 55-64 45-54 U.S. U.S. 35-44 Household Income < Median <35 White Homeownership (HO) rates for the US bottomed out at 63.5% in 2016. This was the level in 1994. Peaked in 2005 at 69.0%. In Q1 2018 rates were up to 64.2%. HO rates increase with income. Bottom quintile at approximately 35%, top at 90%. Racial differences profound. In the last year, rates for black homeowners dropped to 42%. Rate was 7% higher in 2004. (White rate dropped by 3% over same period). Interestingly, Hispanic rates have increased by over 4% in the last four years. HO rates by age (with a focus on older Americans). Rates for HO aged 65+ holding steady at 78% (peaked in 2011 at 81%). Rate even higher for households 75+ at approximately 83%. U.S. Hispanic Black Source: US Census Seiler – Ballard Spahr 2018 National Housing Symposium

America is aging—by 2035 one-third of households will be headed by someone aged 65 or older 57 mill 50 mill 19 mill 16 mill Over the next 20 years, the 65+ y.o. population will grow from 48 mill to 79 mill. This is 30 mill → 50 mill households. One-third of households in US. In 2035, there will be 16 mill households that are 80+. Of these 9 mill will be one-person households. HO rates among older Americans is high. Expect over 12 mill homeowner households age 80+ in 2035. Seiler – Ballard Spahr 2018 National Housing Symposium Source: Joint Center for Housing Studies of Harvard University

Seniors are not averse to holding home secured debt Percentage of families with home secured debt has fallen since 2007. This is driven primarily by younger families. After steep rise, households aged 65-74 have stayed at an elevated 40%. Major increase for 75+ households. In 2016 survey more than 26% held home secured debt. Levels also up for those holding debt (see bullet on slide). Seniors aged 75+ were four times more likely to hold home secured debt in 2016 than in 1989. The value of the home secured debt held by seniors aged 65-74 grew by 270% (in real terms) and by 140% for those aged 75+ over this period. Source: Survey of Consumer Finances Seiler – Ballard Spahr 2018 National Housing Symposium

Additional rental units are increasingly being built for higher end income renters: This is in part due to rising development costs with land and construction costs increasing faster than inflation Metropolitan Statistical Area Share of Growth 2006-2016 (by Household Income) Under $25,000 $25,000- $49,999 $50,000-$74,999 $75,000-$99,999 $100,000 or More United States 22% 19% 18% 13% 29% Atlanta 23% 15% 21% Baltimore -5% 10% 54% Boston 2% 7% 16% 61% Chicago 14% 35% Las Vegas 41% 28% 11% Los Angeles 27% 9% 42% New York 1% 65% Philadelphia 30% Pittsburgh -60% 36% 40% San Francisco -4% 0% 93% Seattle 3% 25% 51% Washington, DC 6% 48% Almost 30% of growth from wealthier households who could have possibly bought if they had wanted. Represents almost 3 mm new renter households. 40% of new rentals in 2016 have rents greater than $1500/month (vs. 15% in 2001). New rentals for < $850/month fell from 42% to 18% over the same period (all in real $). Household Income Source: JCHS Seiler – Ballard Spahr 2018 National Housing Symposium

The availability of housing assistance continues to lag the growth of very low-income renters Graph: In 2015 Worst Case Needs reached 8.3 mm. Up 39% from 6.0 mm in 2005. Between 2013-15, there were an additional 582,000 cases. The share of very low-income households receiving rental assistance fell from 28% to 25% between 2001 and 2015 Table: Affordability is 30% rent to income (is hypothetical in that it includes vacant and occupied stock). Availability measures the extent to which affordable rental housing units are available to renters within a particular income range. Nationally, there are only 62 affordable and available units for every 100 VLI renters If we include “Adequate” (i.e., factoring in the physical condition of the apartments), there are only 54 affordable and available units for every 100 VLI renters and 33 for ELI renters. Worst Case Needs: Renters with v. low incomes who don’t receive govt housing assistance and who pay > ½ of their income for rent, live in severely inadequate conditions, or both. Source: HUD Worst Case Needs 2017 Report to Congress. Seiler – Ballard Spahr 2018 National Housing Symposium