A rushing confluence of social, demographic, and economic trends is underway. Suitably planned and constructed senior housing communities can address some of these trends. These new approaches to senior housing can serve seniors and reward investors.
These are some of the major trends that relate to senior housing:
- Declining birthrate: For the eight-year period ending in 2017, the U.S. birthrate (births per 1,000 in population) declined by more than 9 percent.[i]
- Increasing senior population: Demographers project the senior population will grow faster than the younger population for most of the next four decades.[ii]
- Decreasing wealth among seniors: A decline in affordable housing helps explain an increase in senior homelessness. In 2013 HUD reported an increase in homeless shelter use by seniors. Seniors explained 5.4% of homeless shelter use; six years earlier the rate equaled 4.1%.[iii]
- Rising health care costs: According to Fidelity,[iv]lifetime healthcare costs for a retired couple equals $280,000; an increase from previous years’ estimates.
These trends burden young working families helping their aging parents’ cope. And a relatively small number of young workers supports a rising number of seniors claiming retirement benefits.[v]The costs of health care and diminishing wealth burden seniors. Yet, the confluence of trends also presents opportunities to address some of the problems, most notably in senior housing.[vi]
We believe opportunities exist locally in the Twin Cities area to create living spaces that merge affordability and seniors’ special needs. Seniors seek residences in less densely populated areas,[vii]so it makes sense to satisfy that demand in suburban areas. Intermediate-sized communities can work well because they are cost-efficient, enabling affordable solutions for seniors.
In our opinion, direct participation real estate (DPRE) investments present a valuable opportunity. Accredited investors can select and visit certain properties with attributes they think will serve demand well. And we expect DPRE investment returns will not correlate with broader stock market returns. Discover new and emerging opportunities at VincentRE.com and contact Vincent Real Estate at 612-424-8650.
[i]Centers for Disease Control, retrieved 19 Dec 2018 https://www.cdc.gov/nchs/data/nvsr/nvsr67/nvsr67_08-508.pdf
[ii]Wan He, Daniel Goodkind, and Paul Kowal U.S. Census Bureau, International Population Reports, P95/16-1, An Aging World: 2015, U.S. Government Publishing Office, Washington, DC, 2016.
[iii]March 2015 Housing and Urban Development report retrieved 20 Dec 2018 https://endhomelessness.org/new-hud-report-shows-trends-of-homelessness
[iv]O’Brien, E. (April 2018). Here’s How Much the Average Couple Will Spend on Health Care Costs in Retirement. Retrieved 20 Dec 2018 http://time.com/money/5246882/heres-how-much-the-average-couple-will-spend-on-health-care-costs-in-retirement/
[v]Miller, M. (2018, November 29). Column: Future U.S. seniors to face housing crunch as wealth declines. Retrieved 19 Dec 2018 from https://www.reuters.com/article/us-column-miller-housing-idUSKCN1NY1CJ
[vi]Retrieved 19 Dec 2018: https://www.reuters.com/article/us-column-miller-housing/column-future-u-s-seniors-to-face-housing-crunch-as-wealth-declines-idUSKCN1NY1CJ?feedType=RSS&feedName=PersonalFinance
[vii]Schuller, J. (2010). Housing for Minnesota’s Aging Population: Discussion Paper. Minnesota Housing Finance Agency Research and Evaluation Unit. Retrieved 13 December 2018 from http://mnhousing.gov/idc/groups/secure/documents/admin/mhfa_010262.pdf(See map on page 6).
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