Addressing Senior Housing’s “Forgotten Middle”
Multiple reports discuss the continued aging of the American population and the continued lag of senior housing to meet the demand. According to a recent Urban Land Magazine article, there’s more to the issue than simple supply and demand. Specifically:
- Upper-end senior housing is performing quite well
- Government subsidies are available to support housing for lower-income seniors
- The challenge involves appropriate housing for middle-income seniors
The Reality
“If you need supportive housing or assisted living, it’s either private pay or Medicaid. But a massive number of people in the middle can’t afford private pay and don’t qualify for Medicaid,” said National Investment Center (NIC) for Seniors Housing & Care Lisa McCracken in the article.
The University of Chicago’s National Opinion Research Center (NORC) reported that 16 million middle-income seniors by 2033 “will struggle to pay for the health, personal care and housing services they need.” NORC said that nearly three-quarters of middle-income seniors won’t have the means to pay for assisted living if needed. “Even with home equity, nearly 40% will not be able to afford assisted living,” NORC said.
The Causes
Part of the problem is middle-senior incomes, combined with the cost of food and medications. The Urban Land Article explained that even paying a lower rent and engaging outside services might not be affordable. The Joint Center for Housing Studies at Harvard University reported that only 14% of adults age 75 and older who live alone can afford daily home health care after paying for housing, food and medicine.
On the development side, building senior housing for the forgotten middle cohort has challenges similar to all real estate development, including construction costs and limited capital availability. As senior housing is operations-driven, banks are more reluctant to lend to developers. “In addition, there are the challenges of serving a market that has budgetary constraints and the need to provide more than housing alone,” the Urban Land Article said.
Possible Solutions
The article’s solutions included an integrated approach that focuses on housing, healthcare and social infrastructure. Other experts quoted in the article suggested improved operational efficiency and streamlined services. Other helpful possibilities focused on design changes, fewer amenities, and strategic partnerships.
