Fortune reports that a housing crisis may be brewing as baby boomers hoard their homes and refuse to move into financially out-of-reach assisted living facilities.
Financial analyst Meredith Whitney said the baby boomer generation is keeping their hard-earned homes because moving into assisted living spaces is just as costly. During an interview, Whitney highlighted that some older Americans are strapped for cash and borrowing against their homes. Forty-four percent of home-equity loans are being taken out by seniors, which she calls “counterintuitive.” “It’s crazy, right?” she questioned.
Whitney’s viewpoints vastly differ from the standard narrative that most baby boomers are financially secure and sitting on wads of cash. It may be true for some, as seniors account for 42% of all homebuyers compared to millennials, who account for 29%. “I divide it into different cohorts,” Whitney said.
“So the senior, which everyone thinks ‘the boomers have all this money’—that’s a small portion. Seniors are living paycheck to paycheck.”
The generation collectively has $75 trillion of wealth. However, Whitney, also known as the “Oracle of Wall Street,” who predicted the Great Financial Crisis, estimated that only 1 in 10 seniors can afford assisted-living facilities, forcing many to stay in their homes with super-high mortgage rates.
As a result, the rates have created a “lock-in” effect, described as when homeowners who got into the market at low rates are hesitant to buy new homes given today’s increased borrowing costs. “This is one of the problems with the housing inventory,” Whitney said during the Bloomberg TV interview. “They’re staying in their houses longer because they can’t afford to move out.”
The burden isn’t just on boomers. Their millennial and Gen X children are stuck with unaffordable long-term care for their aging parents. As the elders no longer have the means for long-term care, according to Yahoo News, the next generations typically leave their jobs or work less to provide care. Social Security experts call it a “sacrifice” that can potentially hurt them financially currently and in the future. “The bigger issue is you can create almost a cycle of poverty,” said Professor of Gerontology at the University of Massachusetts Boston, Marc Cohen.
“It’s not something that just sticks with one generation. The costs are borne communally.”
A 2023 Harvard Joint Center for Housing Studies report confirmed that privately provided long-term care, like assisted living communities and home healthcare, is out of reach for the average middle-class citizen. Less than 15% of Americans 75 and older living alone in major US cities could afford to pay for assisted living or home health aide visits without dipping into their savings. There may not be much assistance from the federal government, as the Trump administration focuses on Medicare, the government’s health insurance program for older people.
Medicare also doesn’t cover most long-term healthcare.
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