The online peer-to-peer home-sharing network Airbnb is no longer just appealing to millennials. It is now a useful source of income for the baby boomer generation who want to age in place but don’t have the income in retirement to do so.
The San Francisco-based startup launched in 2008 and has since changed the way people travel around the world. Some large cities have had mixed feelings about allowing the company to operate, though it is no small feat that retirees can make an extra $8,350 each year through home-sharing, according to a report released last Monday by Airbnb and AARP.
Minimizing financial burdens
There are generally three options people have when it comes to making financial ends meet in retirement, Gene Sperling, former national economic advisor and director for the National Economic Council under Presidents Clinton and Obama, consultant for Airbnb and co-author of the report, explained in a webinar hosted by AARP last week.
They can downsize by moving away from the home and neighborhood they hope to age in, they can stay in place and face high housing cost burdens or can take out a reverse mortgage—that is if the home has significant equity in it already.
“When most Americans are 65 or older, the amount of their income going towards housing costs goes up to 40%-49%, Sperling said. “And by the time people are 75 and older, you are seeing excessive cost burdens of 60%-63% of income going to housing.”
Older adults who decide to home share can essentially have the best of both worlds. They have the chance to stay in the home they love, in the neighborhood they love and near the people they love.
Adults 75 and older who supplement their income through Airbnb home-sharing can cut the fraction of their income spent on housing in half to 34%, according to the report. For those 65 and older, they can cut the percentage of income spent on housing costs down to 26%.
“The $8,350 annually can make an enormous difference for many older Americans, because many need to make changes to their life as they age,” said Sperling. “This could include paying for in-home care or making adjustments to their home, which can also help the home be a more attractive rental. More importantly though, they can stay in a home that is safe and comfortable.”
Of Americans 65 and over who use Airbnb home-sharing, 35% report that hosting has helped them avoid eviction and 13% said that hosting has helped them avoid foreclosure.
Future of home-sharing
The impacts of home-sharing on the economies of large cities, such as worsening affordable housing issues in New York City and San Francisco, is often an argument made by the opposition, but after allowing Airbnb to enter into the Philadelphia market, there has only been great success, Michael Nutter, chair of Airbnb’s mayoral advisory board and former mayor of Philadelphia, explained.
“One of the fastest growing group of hosts is older Americans,” Nutter said on the webinar. “They are actively engaged in hosting and having people in their homes. People have been opening their homes for a long time, it’s just a new variation on an old theme.”
Even more, older hosts through Airbnb were found to be some of the highest rated on the platform. Of the hosts reported on, 63% of trips hosted by women 65 and older resulted in a 5-star review.
This movement of aging in place will only see more growth in the coming years, Sperling added.
“Right now there are 46 million people age 65 and older, but that number will increase to 70 million by 2030,” he said. “The aging of America is no longer a one generation issue.”
Written by Alana Stramowski