Meeting the Housing Needs of an Aging Population
Amid all of the fuss about Millennials, let's remember that our population on the whole is aging. Among the many repercussions: We'll start to see explosive growth in the need for housing that offers affordability, accessibility, support services, and community over the next 10 to 20 years. Once it hits, it'll continue for years. We'll need to start preparing for the coming wave and taking advantage of opportunities it presents.
What's the Forecast?
About one-quarter of the U.S. population will be age 50 or older by 2030. Led by the massive Baby Boom generation, nearly 39 million adults will be between 65 and 74 years old then, almost twice the 2010 number. By 2035, the number of households aged 80 or older will have doubled since 2010.
The Joint Center for Housing Studies of Harvard University (JCHS) reports on The State of the Nation's Housing 2015 and Housing America's Older Adults contain some pretty startling statistics and projections. In summary, here are some of the main factors that we, as a society, must keep in mind as we think about housing needs:
People generally are living longer and maintaining active lifestyles as long as they can.
Preferences for homeownership have been shifting. One-quarter of renter households in 2014 were aged 55 and older – but this cohort accounted for 42 percent of renter growth over the last decade.
After age 50, adults more commonly live alone, having been divorced, never married, or widowed and/or an empty nester. Women are more likely than men to live solo, and the odds go up as time goes on.
More adults are putting off retirement. But in time, they lose earning power. An additional 10 million adults 65 or older will be considered low-income in the next 10 years.
This will magnify an already-worrisome fact: One-third of Baby Boomers – 20 million – were "cost-burdened" in 2012, spending more than 30 percent of their income on housing. For half of them, housing consumed half of their income.
After age 65, 70 percent of adults will need some form of long-term care in later years, the U.S. Department of Health and Human Services estimates.
These factors and others will influence the types, locations, and amount of housing needed in coming years.
Being properly housed and cared for is vital to overall well-being, but can be harder to achieve as we age. More needs to be done to make it possible – the urgency will only grow in coming years. Something else to remember: Within the next 20 years, Millennials will start moving into their 50s.
What Can Be Done?
With concerted efforts, we can help give older adults the support and access to the housing alternatives they need and deserve.
Advances in health management options can delay a move into alternative housing. But eventually, typically between age 80 and 85, most of us likely will want or need to move into seniors housing.
We're not talking about our grandparents' nursing homes. The main property types:
Independent living, where adults live on their own but also get extra help with certain activities and services, including food-service options.
Assisted living, where adults still live on their own but also get help with basic daily activities. These facilities also provide meals.
Memory care, which addresses the needs of seniors with moderate to severe dementia. Estimates are that half of adults older than age 85 have some level of dementia. Demand for this type of care is rising.
Skilled nursing, which delivers specialized care to seniors who are unable to care for themselves.
Continuing care retirement communities offer the continuum of care levels in a single property.
Importantly, seniors housing also offers the sense of community that people crave. But costs run high, varying by the location and level of care and service. That said, seniors housing – in particular, independent living, assisted living, and memory care – can be much less expensive than full-time in-home or skilled nursing care.
Even with the recent uptick in seniors housing construction, vacancies remain relatively stable and rents keep climbing in most markets. Much of the building has focused on high-end properties in top-tier markets. These don't directly benefit households outside of higher-income brackets or in smaller markets, although any new supply is beneficial because it helps increase vacancies and drive down rents locally. Still, most markets could absorb more seniors housing – particularly for the middle- and lower-income levels.
While new construction is critical to meeting the housing needs of an aging population, it's equally important to keep existing housing livable. Timely and meaningful renovations or rehabilitation can help keep properties in inventory.
For our part, Freddie Mac Multifamily works with our customers to deliver a full range of support to the seniors housing market from coast to coast. It's our mission. It's also the right thing to do. In fact, to best serve the market, we work with a select network of seller/servicers highly experienced in seniors housing finance and quality facility operators, with a sharper focus on smaller cities and underserved markets. We are committed to growing and expanding our ability to provide capital to this critical segment.
The U.S. population is aging. We'll need to adjust for this demographic shift by supporting continued innovations and adaptations in housing for our nation's seniors.
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