Blame it on the pandemic, the imbalance of supply and demand, inflation, or a combination of the three, but either way, housing costs are skyrocketing, older Americans are renting, getting older on site or are looking to buy a new home.
How bad is it? According to real estate platform Zumper, rental prices jumped 12% year-over-year in 2021 and continue to rise this year. The median price of a one-bedroom apartment rose 1.5% in February compared to January. To put things into perspective, for all of 2020, the median rent for a one-bedroom apartment increased by 0.6%. In 2019, this was an increase of 0.3%.
“That’s a lot for a month, especially if you factor in February in many parts of the country, it’s cold and nobody wants to move,” said Jeff Andrews, senior market analyst at Zumper. “Typically, rents go down in the winter and that hasn’t happened at all.”
House prices are also soaring. According to the US National S&P CoreLogic Case-Shiller Home Price Index, home prices rose 18.8% in the 12 months to December. According to the National Association of Realtors (NAR), in January the stock of available homes stood at 860,000, which Gay Cororaton, senior economist at NAR, says is equivalent to 1.6 months of supply. The desirable level is five to six months supply.
There are reasons for optimism later in the year and beyond. The Federal Reserve plans to raise interest rates several times this year. This will lead to higher mortgage rates, reduced demand for housing, and ultimately slower or even lower price growth. “We should expect slower home appreciation in 2022 and over the next two years,” Cororaton says. “Rising rates will help control housing demand and make prices more affordable. This will affect the rental market.
But if you’re one of the countless seniors who can’t wait for housing prices and rents to cool down, there are some things you can do to cover the costs today.
1. Trade longer to rent
If you’re struggling to pay your rent or are worried your landlord will raise it or worse, evict you, try negotiating a longer lease, Andrews says. This tactic may work better if you’re renting from an individual rather than a property management company or a large real estate conglomerate that owns many properties and has to answer to shareholders. “I live in Brooklyn in a brownstone and my landlord lives below me. She rents to pay her mortgage. It’s been five years and she hasn’t raised my rent yet,” Andrews says. “My landlord tries to pay her mortgage and my rent does. She doesn’t have an unconditional motivation to try to raise my rent.
2. Reduce your digging
Downsizing to a smaller apartment or moving to a less desirable part of town can help you save money if you’re having trouble paying your rent. Identifying ways to reduce your living expenses and taking on a roommate can also help you pay your housing costs. A recent AARP survey of older adults found that 69% would be willing to share their home with a non-spouse parent and 54% would let a friend live with them as they age.