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Eye On Housing T Policy Recommendations The increasing number of senior house- holds also increases the urgency to develop policies that allow seniors to stay in their homes as they age, Goodman explained. “This includes encouraging home modifications that reduce the number of debilitating trip and fall injuries,” she noted. “It also includes changes in zoning laws to allow for house sharing and the construction of accessory apartments.” he housing market is poised for a big change over the next 15 years. The data shows some alarming trends: A housing market that has over- corrected itself in the aftermath of the housing bubble, a nation in the midst of a rental affordability crisis, and an entire generation that likely is headed for a severe housing shortage. Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute, leads a team to investigate these pressing issues facing the housing industry and uses a trail of data to find answers. Generational Concerns On the Rental Market An affordability crisis is brewing in the rental market. Each age group seems to have its own set of concerns when it comes to the future of housing, as generational challenges of the future increasingly creep into real estate talks. Top Producers Gilroy Office, 2015 Marta Dinsmore, Realtor Intero Real Estate Services 408.840.7420 DRE #01352339 Sean Dinsmore, Realtor Intero Real Estate Services 408.840.7327 DRE #01966405 22 What the Data Shows Millennials are edging into home ownership at a slower rate than previous generations, showing a higher propensity to rent versus buy. They are also struggling to save enough for a down payment to one day become homeowners, according to Goodman. Baby boomers have their own housing concerns, possibly facing a severe shortage in the coming years. The Urban Institute lately has been looking into baby boomers, especially since the number of households over age 65 is projected to surge from 25.8 million in 2010 to 35.4 million in 2020 and then 45.7 million in 2030. In fact, the largest household increase between 2010 and 2020 will be in the age 65 to 74 age group (birth years 1946-1955), with a 6.8 million increase expected in the number of households. The Challenge Ahead “As baby boomers age and move onto fixed incomes, they will be competing with other groups for increasingly scarce affordable rental housing,” Goodman said. “Even those with a mortgage may find mortgage payments difficult to maintain on their fixed income.” GILROY • MORGAN HILL • SAN MARTIN JULY / AUGUST 2016 What the Data Shows For decades, the number of new home- owner households has significantly exceeded the number of new rental households, until recently (see sidebar). What’s more, steep demand is outpacing rental supply and resulting in skyrocketing rental costs — rental prices have shot up at least 4 percent for just the past two years alone. An unprecedented number of families are paying more than half of their incomes toward rent. The Urban Institute forecasts that rental demand will continue to surge until at least 2030— with affordability problems in the rental market showing no signs of fading fast. The Challenge Ahead Surging rents is making it difficult for renters to save enough for a down payment to transition into home ownership. Also, the rental shortage is expected to get worse as the number of new renters continues to outpace new homeowner households. Policy Recommendations “We must increase current annual production of multifamily units to keep up with demand,” Goodman said. “Also, we must ensure that more units are affordable.” The Urban Institute suggested that single-family homes turned into rentals should be considered part of an affordable housing strategy. This is due to the sheer volume that already exists, and the tendency for these units to be more affordable to low and moderate income individuals and families.