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 Seniors Housing Affordability Demands Lower Costs, Innovative Development

In a second recent report on making seniors housing more affordable for the nation’s “middle-market” consumers, the National Investment Center for Seniors Housing and Care (NIC) and NORC said data point to the need to prioritize policies that lower the average cost of housing and care to make the system work for more income brackets.

NORC data show that fewer than half (46 percent) of America’s middle-income seniors will be able to afford the $60,000 average annual costs of seniors housing and out-of-pocket medical costs in 2029. But, if the costs were cut, millions of older adults could benefit, the study said. 

“Today’s housing stock simply cannot accommodate the influx of middle-income seniors projected to need seniors housing and care within 10 years,” said Beth Burnham Mace, chief economist at NIC, which supported the study.

“Making seniors housing accessible to more middle-income seniors in the next decade requires innovation by real estate developers, owners, operators, and investors to create and deliver affordable, quality options.”

NORC, which is based at the University of Chicago, also has data that show an additional 5.9 million older adults would be able to afford seniors housing if annual costs were cut by $15,000. If average annual costs for seniors housing and care fell by just $10,000 per year, an additional 2.3 million older Americans would be able to afford it, NORC said.

Currently, the study said seniors housing is most often paid out-of-pocket by those with “ample” assets, with a relatively small percentage of Americans having long term care insurance to defray the costs.

In order to afford long term care, researchers said many middle-income seniors may be forced to rapidly spend down their assets to levels where they qualify for Medicaid. 

“The doubling of middle-income seniors in America over the next decade presents challenges to the Medicaid system and potential opportunities to the private sector,” said Caroline Pearson, lead researcher of the study at NORC. “If the sector can develop products that appeal to middle-market consumers at a price they can afford, it will greatly expand the potential market for seniors housing and increase options for these previously underserved seniors.”

For the purpose of the study, researchers defined middle-income as people who are 75 and older with annual financial resources of around $25,000 to $95,000.

To remedy the affordability crunch for so many seniors, the study suggested private-sector strategies such as offering more basic housing products, better leveraging technology, subsidizing middle-market residents with higher-paying residents, developing new pools of investors and capital providers, and adapting existing properties, like shopping malls, for new uses.

There could also be an effort to “more robustly” engage unpaid caregivers and develop innovative real estate financing models, among other options, the report said.

Private and public sectors also need to work together on possible solutions for developing the financing or housing options for the middle-market. “Whatever the solution, experts say it needs to happen quickly,” the study said.

According to NIC, it would take 17 years at current construction rates to build the 750,000 additional seniors housing units needed to serve the middle-income market. Researchers said older adults a decade from now will also face more challenges with mobility, chronic conditions, and cognitive impairment. 

For more information, go to www.nic.org.

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