US housing market to face new opportunities, challenges meeting needs of older Americans with diverse lifestyles who mostly want to remain in their homes as they age, finds Urban Land Institute study
October 17, 2012
– Aging but active baby boomers, as well as the generations before them, are creating new opportunities and challenges for the U.S. housing industry, in terms of meeting the diverse lifestyle needs of people in various phases of their senior years, according to a new publication from the Urban Land Institute (ULI).
Housing in America – The Baby Boomers Turn 65 explores the housing market changes that will occur as the leading edge of the baby boom generation turns 65; and, as the Silent Generation (aged 67 to 85) and the Greatest Generation (aged 85 and older) make housing choices for their elderly years. The report, written by ULI Senior Resident Fellow for Housing Fellow John K. McIlwain, was released today ULI’s fall meeting in Denver.
“The combination of the leading-edge boomers reaching 65 with expectations of a longer life than ever before, and the fact that many of the Silent and Greatest generations are running through their limited retirement savings — combined with a continuing reduction in federal and state resources for housing subsidies– is leading to a coming crisis in U.S. housing for those over 65,” McIlwain says.
The world’s population aged 60-plus is expected to reach 1.2 billion by 2025, and almost two billion by 2050. The 65-plus population in the United States, which totaled about 40.3 million in 2010, is expected to reach 54.8 million – a 36 percent growth rate – by the end of this decade, as 40 million baby boomers turn 65.
The combination of aging baby boomers and those older than boomers has created not one single market segment, but a variety of market segments, notes McIlwain. “Over the last two decades, unprecedented change has occurred, and today three separate generations are over 65, each with its own outlook on life and distinct housing needs that are unlike those of past markets for people in their age group.”
Currently, more than half of Americans over 65 live in suburbs, notes the report. Because many people prefer to remain in their own homes as long as possible, or may not be able to sell even if they wish to move, suburbs are expected to continue to see substantial growth in their over-65 populations. Naturally occurring retirement communities are on the rise in the suburbs, requiring increasing levels of support. The report suggests that local governments will be increasingly pressured to provide services to those aging in place. Whether provided in seniors’ homes or at providers’ locations, services for suburban seniors require cars, vans, buses, and drivers. What to expect: more suburban group homes and “virtual villages,” as well as permit modifications for age-restricted communities and the establishment of group homes.
Centrally located urban neighborhoods, including those in downtown cores as well as inner-ring areas, can provide services and amenities – including public transit, health care, pedestrian-friendly streets, arts, culture, ongoing education, libraries, retail stores, and human interaction – that appeal to older as well as younger residents. To accommodate a higher proportion of seniors, however, cities may need to make a range of infrastructure improvements such as curb cuts, benches at transit stops, access to bathrooms, slower timing of traffic lights, well-maintained sidewalks, and zoning that allows people to rent out portions of their homes.
The nation’s approximately 50,000 housing communities for seniors – including those providing independent, assisted living, and/or full nursing care – would seem to be a growing market, but in reality, are on the decline, notes the report. Since the beginning of the Great Recession, these communities have faced difficulties finding new residents to replace those leaving. This is due in part to the high cost of retirement housing and the fact that many members of the Silent and Greatest Generations have insufficient retirement savings. However, other issues are at play, according to ULI’s McIlwain. “No matter how attractive and supportive an institution is, it is still an institution,” he said. These communities’ institutional nature, suburban locations, and existing “old-old” populations make it difficult for them to attract new residents, particularly younger ones. The ULI report suggests “greening” of existing communities to appeal to younger residents as well as investors, while reducing operational costs.
Beyond traditional seniors housing, leading-edge baby boomers and “Silents” are exploring a diverse mix of living options, creating niche markets that could become significant in size due to the large numbers of over-65 Americans who wish to move. These include:
McIlwain points to a likely tug-of-war between the housing needs of younger and older generations in the years ahead, as Generation Y, at 80 million, enters the housing market in force. “Stretched as they are financially, the over-65 population is better off than Generation Y, which faces the worst financial future since the Great Depression, while anticipating the burden of caring for all three of the 65-plus generations,” McIlwain says. “How federal and state funding will be divided among generations in an era of diminished federal resources will be a dominant political and policy struggle of the coming decade and beyond.”
ULI’s Housing in America study is a joint project of the ULI Terwilliger Center for Housing and the ULI Foundation, which supports ULI’s program of work. The ULI Terwilliger Center was established in 2007 by J. Ronald Terwilliger, chairman emeritus of Trammell Crow Residential. More information on the ULI Terwilliger Center is available here.
NOTE TO EDITORS AND REPORTERS: To obtain a copy of the report, contact Trisha Riggs at 202-624-7086.
About the Urban Land Institute
The Urban Land Institute (www.uli.org) is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has nearly 30,000 members representing all aspects of land use and development disciplines.