The Growing Challenge to Affordable Housing for Seniors
There is strong demand for affordable multi-family housing for seniors. One of the programs best suited to meet this need is the Low-Income Housing Tax Credit (LIHTC). However, with the aging of the baby boomers, more seniors are reaching the age where additional care is required. This makes remaining in their homes - including non-service-oriented multifamily housing - much more difficult. Finding ways to keep seniors in their homes for longer periods is an industry-wide challenge. Aging baby boomers are living longer and have better financial safety nets than prior generations. They also are more likely to be divorced, live far from their children, and be living with debt and a chronic condition. Impact on Affordable Housing Operators The United States is ill-equipped to handle the largest generation of elderly adults in human history. The long-term care industry is already at a breaking point and there are fewer caregivers to assist the elderly with their daily needs. To make matters worse, the world is not designed to care for the elderly. 2020 data from the U.S. Census Bureau indicates that by 2030, all baby boomers - those born between 1946 and 1964 - will be considered seniors. According to the Population Reference Bureau, the population of people 65 and older is expected to nearly double from 51 million people in 2017 to 95 million by 2060. The Caregiver Shortage Hits Rural America the Hardest States in the Southeastern U.S. have the highest percentage of adults with conditions that interfere with daily activities like dressing or getting around. A study in Health Affairs found that these same states have the fewest personal care aids per capita. It is rural areas that face the biggest caregiver deficit. The states with the lowest number of personal care aides per 1,000 adults with a self-care disability are mostly southern, including Mississippi, Alabama, Georgia, Florida, North and South Carolina, Arkansas, Oklahoma, Tennessee, and Kentucky. The Health Affairs study was led by the University of California, San Francisco, and found that the number of adults with self-care disabilities was highest in the South, as well as parts of Maine, the Pacific Northwest, and New Mexico, ranging from 3.9% to 8.7% across the U.S. The authors of the study indicated that potential cures for the shortage include increasing wages and benefits, improving training and career development options, adding flexibility to state Medicaid waiver programs to pay family caregivers for providing personal care services, and providing incentives and compensation for travel. What is Behind the Lack of Caregivers? Based on information from the Population Reference Bureau, changing family dynamics are leading to a growing gap in the number of family caregivers. Baby boomers generally had fewer children than their parents did - and their kids are more likely to have moved away from their parents and are too far away to provide meaningful care. Baby boomers are more likely to be divorced, which means they may not have a partner to care for them. Many remarried with stepchildren, who studies show are less likely to care for an aging parent than biological children. Some Good News - Private Equity Private capital sees the opportunities for elder care and is pouring money into the market. While profit is important for these investors and the perceived dangers of private equity have focused on nursing homes, the truth is that most of the investments are going elsewhere. In fact, private equity firms own just 5% of U.S. nursing homes. Most of the new business models are designed to keep people out of long-term care facilities, and private capital is following that innovation. Investors are now focused on providing care delivery and technology companies that address every facet that can help people live independently and longer. Cost is a Major Impediment Older Americans are the biggest cost component in health care, and care delivery and outcomes are very inconsistent. It was the recent COVID-19 pandemic that shed light on disparities in health care across rural communities and low-income and marginalized populations. This is where some of the investors and entrepreneurs are focused - dealing with healthcare inequities. These groups recognize that serving the underserved has the potential to create the greatest value. The goal among these groups is to find a way to deliver affordable care to rural America. Helping people live longer and independently is the focus and involves - In-home and community-based care; and Medicare Advantage primary care, along with various home-based services and technologies ranging from infusion therapy to medication management. While the challenge is great, the overwhelming healthcare need of the over-65 population is a gold mine. While elder care is not a one-size fits all proposition, there is a great opportunity for innovation. Long-term Care - An Opportunity for Affordable Housing Operators Long-term care will become an increasingly elusive need for aging baby boomers over the next ten years, forcing some to spend down their assets in order to qualify for Medicaid. In many cases, this will also increase the need for affordable housing - such as the Low-Income Housing Tax Credit program. Based on data from the National Opinion Research Center (NORC) at the University of Chicago, the population of middle-class seniors in America will increase by 89% to 16 million by 2033. Most will have chronic conditions and mobility difficulties, and nearly 75% will not be able to afford assisted living without selling their homes, and even then, the proceeds may not cover all the costs. Medicare does not pay for long-term care services, and just 7.5 million Americans had separate long-term care insurance as of January 1, 2020. Seniors with incomes too high to qualify for Medicaid are caught in a bind - having to either pay out of pocket for extended care or impoverish themselves in order to qualify for the safety net program. Part of that safety net may well be affordable rental housing, and properties that have foreseen the need for extended care programs will have a distinct advantage. Partnering with local care agencies and non-profits is one path toward developing continuing care as an affordable housing service that will create a competitive advantage for far-sighted developers.