Without more intervention, the affordable housing crisis will escalate

Will today's baby boomers be able to afford their existing lifestyle after retirement? Unfortunately, for many the answer is no. And what impact will this influx of often underprepared retirees have on affordable housing supply and demand?

The NHP Foundation queried boomers and found a real disconnect between this group's actual financial planning and where they envision themselves in retirement.

For the majority of U.S. private-sector workers, the prospect of earing a pension is remote, and the median Social Security benefit is approximately $17,000 per year for men and less than $13,000 for women.

At the same time, older homeowners owe almost double on their mortgage today versus what older homeowners owed a decade ago, according to the Consumer Financial Protection Bureau.

To make matters worse, one in three working Americans has no retirement savings other than Social Security, and 35% of people over 65 rely almost entirely on Social Security, according to Long-Term Living.

An NHPF survey of 1,000 nonretired Americans 50 and older showed a disturbing difference between how they have prepared for retirement and how they expect to maintain their lifestyle: 76% of respondents have either no retirement budget or expect to depend on Social Security for at least half of their retirement income, and 73% expect to delay retirement, mostly for economic reasons. That goal could be cut short by a decline in health.

What does this mean relative to today's affordable housing shortage? The National Low Income Housing Coalition reports a 7.7-million unit shortfall between supply and demand for rental units affordable and available to very low-income households.

Due to high building costs, the majority of new multifamily rents are unaffordable to low- and moderate-income renters. We are not producing new affordable housing or preserving older affordable housing fast enough to keep pace with the rising demand. This condition will be exacerbated as people face retirement with inadequate savings. These seniors will become part of the ever-growing population who need safe, clean affordable housing.

But finding it will be no easy task.

Historically, people of limited means could find cheaper apartment alternatives. However, these "B" and "C" apartments are either being improved to such a degree that existing residents can't afford the higher rents, aging out of existence or being lost to natural disaster.

The most successful program to finance affordable housing is the Low-Income Housing Tax Credit, financing about 100,000 units per year since its inception in 1986. It enjoys bipartisan recognition as a model public-private partnership.

Unfortunately, the amount of housing credits available each year is limited and with the reduction in the corporate tax rate to 21%, the value of the credit has been reduced to the extent that accounting firm Novogradac & Co. estimates the lower value will result in 235,000 fewer units created over the next 10 years.

While there are important bills in the House and Senate with bipartisan sponsorship which will marginally increase the amount of credits available and fix other aspects of the program. They are not enough.

The conclusion is clear: due to insufficient planning and unrealistic goals, many baby boomers, retiring at 10,000 per day, will be piling on the ranks of those already experiencing a severe shortage of affordable housing.

Congress needs to be more concerned about this ongoing crisis and take action in order to stem the tide. Passing current legislation will help, but we urge even more legislative action be taken to address the acute need for affordable housing in the U.S. Otherwise, the growing demand will continue to overwhelm existing resources.