The golden years are on the horizon for the Baby Boomers, but the style in which they live in those golden years may be unlike their predecessors. Baby Boomers are inching away from the typical senior housing developments and retirement living. Instead, many in this generation seem to prefer the urban lifestyle – one that provides accessibility and entertainment. This shift is shaking up the real estate industry and how developers are analyzing trends and building future projects.
The numbers behind the Silver Tsunami
Baby Boomers are known for their impact on shaping the U.S. economy and as they enter their golden years that trend doesn’t seem to be slowing down. As boomers continue to age, they will play a major role shaping the housing market. The Joint Center for Housing Studies of Harvard University (JCHS) reports the number of Americans over the age of 80 is expected to double from 6 million to 12 million in the next two decades. By 2035, one in three U.S. homes will be owned by someone over the age of 65.
As America plans for the rising population of seniors, developers, investors and designers will need to align their strategy to accommodate the shift in generations as well as the change in physcographics (i.e. attitudes, opinions, interests) and demographics. The upswing in demand coming from Baby Boomers includes more affordable housing, accessibility and a range of housing options.
In fact, nursing home usage has been on the decline over the past two decades while alternatives for home care have increased. Given the past and current economic environment, supply trends for senior housing and care are in transition. The effect of the recession on the construction industry caused a reduction in inventory. The dip illustrated in the chart below between years 2007-2009, reiterates the fact that both supply and demand were significantly low. According to National Investment Center for Seniors Housing & Care (NIC), occupancy has declined more than half a percent from 2016 levels.
It’s a lifestyle change
Research shows a vast majority of boomers prefer a different senior lifestyle – one that does not include renting or nursing homes, for starters. Some predict age-restricted developments (i.e. senior-only developments) could experience a spurt of growth. But, the type of growth in senior living might be surprising. Philip Searles, President of the Beverly J. Searles Foundation, believes the Baby Boomer generation is going to be quite different than the silent generation when it comes to lifestyle.
“It’s a lifestyle change with senior living. We see a lot of growth for the respite and memory care. Dementia is going to be one of the fastest demographics within senior housing,” said Searles.
Searles thinks developers involved in the senior living industry will have new opportunities and the competition could be stiffer. Since Dementia is anticipated to be a driver when it comes to the overall function and design of assisted living housing, builders and operators of these developments are re-thinking their overall approach.
“If you historically look at the average stay in assisted living – we are seeing people push back further and further before going into memory care. I think communities will have new opportunities with senior housing since boomers are more health conscious,” said Searles.
In addition, technology will also be a game changer when it comes to senior housing and assisted living for Baby Boomers. Now, most Baby Boomers are used to having instant access to information and resources.
“Like I said before, boomers are going to be very different than any generation before – they have a desire to have more freedom and more flexibility. I think you’re going to see self-driving Uber cars for seniors to get around.”
Fear and uncertainty
Since we are living in a more health conscious society, seniors are poised to live longer and longer. That said, the older generation will be forced to deal with financial challenges. The JCHS estimates 17.1 million older adults will experience some type of financial strain. These financials burdens could stem from many factors including shortfalls in Medicare and Social Security as well as the implications caused by the recent recession.
“We also see that a lot of seniors retiring are going to be on fixed incomes. The traditional model of someone retiring at 65 and getting the gold watch and the pensions isn’t as common. If you ask my residents what their biggest fear is – it’s running out of money.”
As Baby Boomers eye retirement, builders are anticipating an affordable housing boom. The Projections and Implications for Housing a Growing Population: Older Adults 2015-2035 report states there will be an increase in demand for affordable housing that provides accessibility and is well connected to services. It is safe to say Baby Boomers will continue to reshape the way Americans view old age and how developers respond to this changing community.
About Philip Searles, President of the Beverly J. Searles Foundation
In addition to serving as President of BJS Foundation, Philip is a member of the Board of Directors of Antioch A.M.E. Community Development Corporation. Philip joined BJS in 2008 after working as a senior auditor for BDO Seidman, LLP for two years. During his time with BDO, Philip led engagements of public companies in the telecommunications and financial services industries. Philip also led engagements of private companies in the real estate and distribution industries. Prior to BDO, Philip worked with the Reznick Group as an auditor of affordable housing properties, routinely compiling financials from both construction and operating general ledgers and booking joint assets such as property, plant and equipment. Philip also worked with Georgia Pacific for over two years in the Corporate Credit as well as Internal Audit of their Building Products division. Philip graduated from the University of Alabama in 2002.