Tag Archives: senior tenants

Am important element of @RetirementPREP may be to own your home

The above tweet references an article that appeared on April 1, 2016 in the Wall Street Journal. The article includes:

With fewer seniors owning homes and having fixed mortgage payments, they have become susceptible to rent increases, particularly in high-demand areas. In San Mateo County, just south of San Francisco, where Ms. Plymale lives, more than 54,000 new jobs have been created since 2010, but only about 2,100 new housing units have been built in that time, according to the county. In the past four years, monthly rent for two-bedroom apartments in highly marketable multifamily buildings surged nearly 52%, to an average topping $2,800.

Of all renters, those age 75 and older have the greatest incidence of “severe” cost burdens, meaning more than half of their incomes go to rent, according to Harvard research. The typical renter ages 65 to 69 has household income of $24,700 annually, about 40% less than the median renter household income for those ages 45 to 49, according to an analysis of census data for 2014 by Enterprise Community Partners, an affordable-housing nonprofit. “You can’t really go and renegotiate with Social Security about how much you’re getting paid,” said Chris Herbert, managing director of Harvard’s Joint Center for Housing Studies.

Adding more housing is a daunting task, particularly in suburbs where locals are wary of more residents and traffic. Community Legal Services in East Palo Alto, a nonprofit, is pressing several Bay Area jurisdictions to institute new tenant rules, including capping rent hikes to a percentage of the consumer-price index. Deliberations are roiling communities, and pitting those who believe governments should impose new regulations on landlords against those who say such measures violate private-property rights.

Landlords in San Mateo County and other high-cost areas often say many rent hikes are necessary to pay for overhauls of aging buildings as well as other escalating expenses like increased property taxes. New owners in particular can face big tax increases because California law generally allows for a jump in assessed values after a property changes hands from a longtime owner.

“If you’re paying rent of $1,000 for a two-bedroom unit but the market is now $1,800, you really can’t expect the property owner to not ask for $1,800, because what you’re really asking the landlord to do is to subsidize somebody,” said Tom Bannon, the chief executive of the California Apartment Association, the country’s largest statewide association for rental-property owners and managers.

It strikes me that owing one’s own home will provide less volatility in housing costs. That said, ONLY renters can can live free of the costs of owning a building! But, renters do pay the cost of property taxes. Interestingly, in Toronto many tenants subsidize the property taxes of home owners.