November 20, 2019
All across the country, a housing crisis is unfolding for seniors in the “forgotten middle.” Today, more and more people in our aging population are finding themselves with no place to call home, as they can’t afford market-rate rental apartments, and don’t qualify for low-income housing.
Many in this particular demographic were hit hard by the Great Recession and are turning to rentals because they have lost a significant portion of their retirement savings, took on debt to fund their children’s educations, and can no longer keep up with their mortgage payments.
Experts say the shortage is likely to worsen, as the size of the middle-income senior population will nearly double in the next 10 years.
“Is this crisis? I certainly think so,” said Lee Delaveris, vice president of seniors housing and healthcare at Key Bank Real Estate Capital. “The growing number of middle-income seniors has to be top of mind for governments and of course for the real estate industry.”
While developers have established strategies for both high-end and affordable senior housing, there is no clear path forward for those in-between.
“The middle is an economic problem,” said Al Beaumariage, manager of KeyBank Real Estate Capital’s affordable housing program. “At market-rate retirement communities, developers can make a nice income. But in the middle, they’re wondering, ‘Where do I get the return?’ That’s the doughnut hole.”
To compound the problem, most aging Baby Boomers will have health needs that present challenges to living at home. As the over-85 population is estimated to triple by 2050, an unprecedented strain is expected to be placed on the nation’s healthcare system.
Although the prospects may seem dire, there may be an opportunity to solve both of these issues at once by creating new partnerships between real estate and healthcare companies.
KeyBank has taken the lead in this effort. Over the past two years, their team has been working with housing developers, healthcare and managed care companies and local officials to help build a coalition to solve the impending senior housing crunch. With loan products through Fannie Mae, Freddie Mac, and the FHA, as well as products from its own balance sheet, KeyBank is uniquely positioned to create the customized solutions these projects will require.
While the progress has been encouraging, there is still an immense amount of work to be done to accommodate seniors for whom both market-rate and low-income housing are out of reach. To read the full report, download the study now.
For questions, comments or concerns, please contact Jennifer Duell Popovec