The coming wave of aging baby boomers will present several challenges to a senior living industry already struggling to meet the demand of seniors who cannot afford market rate independent living, assisted living or memory care. In particular, the population of older adults is quickly growing in low-density areas where it’s especially difficult to build affordable senior living projects.
The Joint Center for Housing Studies (JCHS) at Harvard University released a new report that indicates the leading edge of the silver tsunami is already here and highlights the challenges they face. More than 50% of U.S. households are headed by someone above age 50. Nearly one-third of households age 65 or older — 9.7 million — spend at least 30% of their income for housing, and more than half of that total pay over 50%.
And the share of older adults living in low-density areas in 95 of the top 100 U.S. metros rose from 24% in 2010 to 32% in 2016, a growth of 6 million seniors. And, while there is a lot of talk about the opportunity to build more senior housing in high-density urban areas, the proportion of older adults residing in the principal cities of 95 of the nation’s 100 largest metro areas actually declined in that time period.
Between 2000 and 2016, the number and
share of census tracts with a majority of older adults
jumped from 1,499 (2%) to 4,764 (7%). An increasing share of these tracts are in lower-density communities within metros as well as in non-metro areas, with particularly high concentrations in Detroit, Michigan; Raleigh, North Carolina; Salem, Oregon; Houston, Texas; Tacoma, Washington; and northern Wisconsin.
The rise of the senior population in dispersed communities will make it more difficult to provide services and transportation alternatives seniors need to comfortably age in place, Harvard JCHS Senior Research Associate Jennifer Molinsky told Senior Housing News.
Molinsky expects the senior population in dispersed communities to continue trending upward.
“Mobility rates for all ages have decreased, and seniors already weren’t moving into assisted living,” she said. “Unless there is another trend to address the demand, this will become a more pressing issue.”
A slowdown in affordable housing development
There has been a slowdown in affordable senior housing development nationally. This is directly related to Congress’ several-year pause of funding the Department of Housing and Urban Development’s (HUD) main affordable housing program, Section 202, and increased competition for low income housing tax credit programs (LIHTC) across the country, LeadingAge Vice President of Housing Policy Linda Couch told SHN.
The LIHTC program is oversubscribed and does not meet the same income population as Section 202. The program is also the subject of an ongoing federal investigation over whether banks such as Wells Fargo colluded with affordable housing developers to underbid for credits.
The desire to expand the amount of affordable senior housing has been constrained by a lack of resources.
“Developers need public resources to subsidize affordable housing development and operations, or else deals don’t pencil out,” Couch said. “Our members have been working hard to preserve their existing affordable units.”
Stuck in place
Deniors in dispersed communities live primarily in single-family homes, and lack both accessibility to affordable senior housing and resources to modify their homes so they may age in place, the JCHS report notes. The report goes on to reveal high numbers of seniors who live in their homes for more than 20 years.
“There is concern in these communities that seniors are stuck in place,” Couch said.
A contributing factor to the problem is a growing wealth gap among pre-retirement seniors.
There is a huge gap in wealth generation among households, the JCHS report revealed. The average net worth of households age 80 or over set a record at $272,000 between 2013 and 2016. Wealth remained static for households ages 60-79, at $232,000. For households in the age 50-64 demographic, however, average wealth was $170,000. More pressing, total number of households with less than $20,000 in wealth increased last year, from 15% to 22%.
If these income distribution patterns hold, seniors in the lower wealth and income brackets will need to rely on a greater amount of subsidies in order to move into senior living moving forward, Molinsky said. The problem is equally acute for seniors in middle income brackets, who have too much wealth to qualify for subsidies, but too little to move into market rate housing.
“People who can’t get subsidized need more options, including housing with services,” Molinsky said.
Leveraging existing resources
Slowly, the foundation is being laid to add more affordable senior housing options. Congress agreed in March to provide $678 million to the HUD Section 202 program as part of the omnibus spending bill — a 35% increase. Couch is optimistic that funding will to continue to increase, with Democratic Rep. Nita Lowey of New York set to chair the House Appropriations Committee.
State and local municipalities can tap into federal block grant programs to ensure future affordable communities are age-friendly and located near transit-oriented resources, and be used to fund home modification programs.
Couch is also hopeful that reforms to the LIHTC program will open the floodgates to future affordable development. She wants to see a 50% increase to states’ LIHTC allocations, for starters. Another reform to the program is a change in bases, allowing subsidizing of lower income households than the program currently supports.
“There has been legislation introduced we hope to move further along in the next Congress,” Couch said.
Written by Chuck Sudo
- 2018_12_3_JCHSlowerdensitygraph: Joint Council of Housing Studies at Harvard University
- Urban Living: Bernard Spragg