“The Senior Living Market Can’t Keep Up With Demand”: A Deed May Be the Best Senior Living Plan

In a recent issue of the CNBC Property Play newsletter, Diana Olick wrote that older adult living is “on the edge of a boom — a baby boom, to be exact.”

Between today and 2030, more than 4 million baby boomers will reach the age of 80. Can active adult and assisted living properties climb aboard the longevity economy and accommodate the forthcoming senior population?

The answer appears to be no. Not by any stretch of the imagination.

The Numbers Don’t Lie.

About 4,000 new senior living units will open for business in 2025 and 2026 combined. That’s not going to cut it.

CNBC cites figures from the National Investment Center for Seniors Housing and Care. What do the numbers show? The senior living sector needs to prepare to receive 100,000 people looking for living spaces each year through 2040.

CNBC spoke with a senior living CEO who has compared the industry’s preparations to putting a balloon on the end of a fire hose. The CEO said developers aren’t providing what’s needed because they’re balking at the interest rates involved with financing new development.

Companies That Bought Up Properties Are Ready to Profit.

Harrison Street is a large investment management firm that deals with “alternative real estate” such as independent living, assisted living, and memory care homes. The firm offers an investment opportunity called the U.S. Core Senior Housing strategy.

In this investment sector, supply is severely limited; demand is growing reliably. Leadership now anticipates the most promising time, financially, in the company’s history.

A CEO of a senior-focused real estate investment trust that owns 850 senior sites — and counting – told CNBC the investment opportunity is unprecedented, with growth expected to run at 28% over the next five years. The company’s huge collection of properties means it can outperform firms that are just now trying to develop sites.

Meanwhile, how are seniors expected to pay? Monthly rents at many senior properties run into the five figures. (The cost typically includes rides to shopping or medical centers, meals, electricity, special activities, and everyday assistance to the degree residents need it.)

Older adults sell their homes for cash to reserve senior living space. Many older adults have seen their home values rise to very high levels, and senior living companies are benefiting from baby boomers’ collective home equity.

Opting to Age in Place? Plan Ahead.

Most people aged 50 to 80 hope to age in place — that is, at home. And it looks like many more of us will need to do so. But this is not just a matter of staying put. It takes preparation.

Those hoping to live at home as long as possible must plan for the basics:

• Accessibility. Downsizing to a home that’s easier to navigate and maintain is usually the first order of business. You’ll want to be sure your home is safe and senior-friendly, inside and out.

• Transit options. At a certain age, driving is a challenge. Are you familiar with local public transit? Do you have safe, simple access to it?

• Daily living. While some support can come from the people you know and love, you may need professional assistance for certain things.  

Consider how you’ll continue to handle your accounts, your housekeeping, shopping, and cooking. These considerations can become especially challenging for solo homeowners and surviving spouses.

Know the Finances of Staying Home for Longer.

Staying home in retirement isn’t cheap these days. The cost of hiring a home health aide, for example, can easily run upward of $5K a month. An entrance ramp costs more than a thousand dollars to install.

If your mortgage is fully or mostly paid off, you may be able to use your home equity to cover living expenses and/or home modifications. There are several options you’ll want to study:

• The home equity loan. Take out a lump sum, then pay it back with interest month by month.

• The home equity line of credit. Using a HELOC is similar to using a credit card; spend only what you need.

• The reverse mortgage. Deed holders aged 62 and up can swap some home equity for cash. Stay alert; watch for scams.

Speak with your financial adviser about the benefits, drawbacks, and tax implications of the above options. If income is an issue, you may qualify for benefits beyond Medicare, such as Medicaid or veterans’ assistance programs; don’t overlook these possibilities.  

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