Baby Boomers May Give Us a Housing Crisis–But Also, a Housing Opportunity
- Mar 28, 2008
The Post-World War II generation is about to become the largest segment of Americans ever to age at one time, according to a recent Chicago Sun-Times article. In fact, 83 million boomers are expected to hit retirement age within the next 11 years.
That’s a lot of people hitting a new life stage–and undoubtedly, many of them will seek new living options, which could have a huge effect on the housing market.
Some will seek single-family homes in communities designed to offer seniors social activities; others who are perhaps not in the strongest health may seek out assisted care facilities, which offer a variety of living options from the very independent to the more medically supervised.
Senior retirement communities–which we’ve written about previously–have been a growing market in recent decades because they offer affordable living with social programming for the post-retirement crowd.
Take, for example, Shea Homes, a large U.S. builder that the Chicago Tribune reports feels Boomers are looking for communities that offer a positive environmental effect. Shea’s banking on it with its new Victoria Gardens community, which is announced last month.
The development–located between Orlando and Daytona Beach, Fla.–will feature homes with a carbon footprint 20 to 30 percent less than that of a typical household.
However, not all developers are so confident about the senior market. Although any reports of post-retirement and senior living communities experiencing huge drop-offs are hard to come by– analysts actually say occupancy rates have been the same and facilities have been able to raise prices because of a high demand for such services–some fear that the housing slump could affect that type of multifamily and single-family housing.
The stock market seems to agree. Shares of assisted-living facility operators have fallen in the past year. Shares of the largest U.S. private-pay senior housing provider–Brookdale Senior Living Inc.–declined sharply in the past year.
The stock troubles, AP reports, are due to concern that future customers will delay moving into facilities until the market improves and they can more easily sell their home.
Seniors may be able to delay moving into that cute retirement home, but for those in need of assisted living, the problem is more immediate.
The Social Security Administration estimates about 10,000 boomers a day–on average–will start collecting benefits for the next 20 years. Yet Social Security is still a mess–its trust fund will be needed to make payments by 2017, but the fund will need to spend its assets in 2027 and will be exhausted by 2041, according to Forbes.
Which makes it all a pressing mess for baby boomers: The Hospital Insurance Trust Fund is projected to need interest payments this year to fund Medicare patient hospital bills. It could be completely insolvent by 2019.
In that case, could assisted living become the only option for some retirees?
That may depend on how well communities prepare now for the baby boomers’ mass transition from work to retirement.
It doesn’t have to all involve public programs (although they likely will be part of the preparation, too): According to the Sun-Times, Chicago’s getting a number of new homes designed by local builders and area nonprofits for the elderly and disabled, who will have difficulty navigating stairs, exiting the shower and reaching high cabinets.
If senior residence prices and occupancy have stayed steady thus far–even during the housing decline–because demand remained high, doesn’t it make sense that we should focus on this market in the future?
We know that the number of Baby Boomers moving into retirement is set to grow considerably–which will increase demand for senior housing options. So what are we waiting for?