poverty level, an extension not permitted, for example by the Moscow agency which makes such loans, then the number increases by another 80,000 families. In sum, under the broader definition, slightly more than 8 percent of Moscow households would be eligible. 22

**Table 1. Pov erty Incidence (in Percent)**

||Poor|NearPoor|N|
|---|---|---|---|
|AllElderlyHouseholds <sup>23</sup>|8.2|21.9|318|
|Singleelderly households|1.8|35.6|83|
|Elderlycouplehouseholds|0.0|11.5|17|

Not surprisingly, given our earlier discussion of the housing delivery system of the old regime, the data analysis finds that the value of the housing units occupied by the elderly poor is not far below that occupied by the elderly non-poor. The median value was $50,387 for nonpoor households and $45,826 for poor households (1995 dollars). The poor are equally likely to live in the city center and live in superior apartments as the non-poor. In short, as expected, they hold a significant amount of housing wealth. An approximation of the size of the asset base that could be annuitized by lower income elderly can be calculated by multiplying the mean price by the number of near poor elderly households. According to our broader definition of eligibility that would include almost 250,000 housing units worth more than $45,000 each, or about $11 billion.<sup>24</sup>

> Thus, since the near poor elderly in Moscow account for only about one-third of elderly

> households, the total amount of housing wealth held by the elderly is potentially enormous. Based on McHale and Pankov (1999), for example, it is an amount that was more than half of the

> $20 billion capitalization of the stock market in the same year. One reason this figure is so large

> is the legacy of the past that we discussed earlier. For example, the 20 percent of elderly households who have incomes in the lowest income quintile own housing worth an average of

> $44,503. As a result, the house price-to-income ratio for these elderly households is 37, a figure that is more than 6.5 times higher than the typical house price to income ratio reported for families in OECD countries in 1990 by Hegedus, Mayo and Tosics (1996). When the average

> monthly income of elderly couple households with incomes 50 percent above the poverty standard is only $111 per month, owning an apartment worth on average over $40,000 makes

> these families, by almost any imaginable standard, unusually house - rich and cash poor.

> In principle, then, there is a large potential demand for home loans and other types of credit by the "house-rich yet cash poor" elderly. The final step in determining whether this wealth could be used to reduce poverty is to convert this wealth into an individual income stream. To

> 22 Only lone pensioners who are 65 years and older, married couples in which the spouse has reached the age of 65, single Group 1 invalids who are 55 years and older, and single Group II invalids who are 60 and older are eligible to participate in the City of Moscow Reverse Annuity Mortgage Program. Under current law, all household members registered as living in a dwelling unit must agree to privatize the unit before it can be privatized. Thus, for the sake of simplicity, we confine the analysis to households which contain elderly members only.

**23** Elderly households include multi-generational households that contain an elderly family member who may or may not be the household head.

**24** With the devaluation of 1998 this value is of course lower in dollar terms.

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