The Effect of City-Level Changes in Home Prices upon the Well-Being of Older Americans

This study investigates how economic changes consequent to the Great Recession of 2007-08 impacted the well-being of older Americans. Using the first two waves of the National Social Life, Health, and Aging Project (NSHAP), I study whether changes in metropolitan statistical area (MSA) median home prices are associated with changes in an index of sadness. I furthermore study whether and to what extent these effects are mediated by changes in older persons’ total household assets. I find that declines in MSA-level median home prices are linked with rising levels of sadness, and that this effect is not mediated by personal financial losses. My results thus imply that contextual economic declines have potent effects upon older persons’ well-being, independent of the impact of their own personal financial losses. My results suggest that in efforts to protect older persons from economic shocks, it is worthwhile to focus on the effective provision of services, the availability of amenities, and the strength of social support within the cities in which older persons live. Perhaps even more important than helping older persons safeguard their wealth is maintaining the quality and the safety nets of the cities in which they reside.