Housing takes the biggest chunk of most household budgets — about one - third to one - half of the monthly budget of older adults. TSCL’s latest Senior Survey indicates that steep inflation has many retirees postponing badly needed repairs and maintenance, others combing through their area for more affordable rents, with little success, and everyone paying significantly more for their housing. The housing crunch is creating a situation that has many of our members fearing loss of their homes, and some even wondering if they will be living in their car next.
For example, we received the following email from a retiree who lives in the state of Washington: I just had a rent increase of $100 in January, and now another $100 rent increase starting in May. Do you know if owners can do that? I have lived here for 7 years and have never asked for anything. Every year a rent increase even though when I moved in, they said they wanted long-term renters. I know rents are going up so fast and this place is a good deal, but if I had to move, I could not afford to. What are people to do? It's no wonder there are more homeless on the streets now. — N.L.
A new paper co-authored by former Treasury Secretary Lawrence Summers, along with independent researcher Judd Cramer, and International Monetary Fund economist Marijn Bolhuis, forecasts that housing inflation will surge about 7% in 2022. But oddly that big jump in housing costs hasn’t even shown up in the government-measured consumer price index — at least, not yet.
By January of this year, housing inflation, as measured by the Bureau of Labor Statistics, had increased 4.1% from January 2021 to January 2022. Yet over the same period of time, home values were up almost 20%, and rents by nearly 15% according to Zillow.com, a real estate website. Another leading measure of home prices, the S & P CoreLogic Case-Shiller Home Price Indices, also measured a 19.1% annual gain in home prices nationally in October of 2021.
Unlike cost increases in other categories, such as food or gasoline which can go up and down over time, housing and rental costs are unlikely to come back down once they rise — at least not any time soon. Renters typically only encounter an increase in rent when they renew the lease or move, but TSCL has received an unusual amount of email citing problematic rental increases of more than 5%.
With high housing, gas, and food costs continuing in 2022, TSCL believes seniors will be facing more major inflation challenges for several months to come. If you feel that Congress has left you behind, consider this — adults age 65 and up are the nation’s largest voting block. During an election year, older voters can quickly get the attention of lawmakers, especially those who have dropped the ball on successfully addressing senior priorities. Help TSCL put together the Seniors Priority Plan for every member of Member of Congress. Take our new Seniors Priority Plan survey: https://seniorsleague.org/2022-senior-priority-plan/.
Sources: “Expenditures Of The Aged Chartbook, 2020,” Social Security Administration, January 2022. “The Coming Rise in Residential Inflation,” Marijn A Bolhuis, Judd N. L. Cramer, Lawrence H. Summers, National Bureau of Economic Research, February 2022.