Numerous reports have highlighted the aging population in America and the lack of adequate senior housing to meet their needs. However, according to a recent article in Urban Land Magazine, there are more factors at play than just supply and demand. The article specifically points out that high-end senior housing is performing well, government subsidies exist for low-income seniors, but there is a challenge in providing suitable housing for middle-income seniors.
The Reality
Lisa McCracken from the National Investment Center (NIC) for Seniors Housing & Care stated that those who need supportive or assisted living must either pay privately or rely on Medicaid. This leaves a large number of middle-income seniors unable to afford private care but also not qualifying for Medicaid.
According to a report by the University of Chicago’s National Opinion Research Center (NORC), 16 million middle-income seniors will struggle with paying for necessary health services by 2033. Additionally, nearly three-quarters of these individuals will not be able to afford assisted living even with home equity factored in.
The Causes
One contributing factor is lower incomes among this demographic combined with rising costs of food and medications. Even if they were able to find affordable rent options and utilize outside services, it may still be unaffordable overall. A study by Harvard University’s Joint Center for Housing Studies found that only 14% of adults over age 75 who live alone can cover daily home health care expenses after accounting for housing costs as well as food and medicine expenses.
On top of financial constraints faced by developers when building senior housing facilities catering towards this “forgotten middle” group include construction costs being higher than other real estate projects along with limited access capital availability due largely because banks are hesitant about lending money towards operations-driven ventures such as these ones.”In addition,” explains Urban Land Magazine’s piece “there are challenges associated serving budget-constrained market segments while simultaneously providing more than mere shelter.”
Possible Solutions
The article suggests an integrated approach that addresses not only housing but also healthcare and social infrastructure. Other experts quoted in the piece recommend improving operational efficiency and streamlining services. Design changes, fewer amenities, and strategic partnerships are also potential solutions to help make senior housing more affordable for the middle-income demographic.
