Middle-Income Seniors Could Get Left Behind In The Future Housing Market

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WASHINGTON – Middle-class seniors are at an increased risk of falling through the cracks of the U.S. housing market. According to the Washington Post, the number of seniors who are middle income is projected to skyrocket and many of them won’t be able to afford housing or healthcare.

A recent study published in the journal Health Affairs reports that the housing market has expanded widely to accommodate people with needs over the last 40 years including assisted living and independent living communities. But many of these new developments are out of financial reach for middle-income seniors aged 75 and older.

Middle-income seniors include people between the ages of 75 and 84 who have an annual income of $25,000 to $74,000 a year.

The private housing industry for seniors has largely focused on higher-income renters. It’s projected there will be 14.4 million middle-income seniors in the U.S. by 2029. Up to 20% will have high healthcare needs and 60% will have mobility limitations.

Many of these seniors will need some type of care that would be provided in senior housing. However, researchers project that 54% of those seniors won’t be able to pay for that care. This gap, researchers say, suggests a role for public policy and the private sector in meeting future long-term care and housing needs.

Researchers used data from the Health and Retirement Study, a national longitudinal study of people aged 50 and older. The study is sponsored by the National Institute on Aging and conducted by the University of Michigan.

Middle-income seniors include Americans who have too much income to qualify for government-subsidized housing but don’t have enough income to live in a senior development. In 2017, the average sales price in Manhattan was $1.9 million for condos in existing buildings.

“The fear is that if they’re not served, they’ll be required to spend down to Medicaid, which will put more pressure on our Medicaid coffers,” said Beth Mace, chief economist at the National Investment Center for Seniors Housing and Care. Mace added that the left-behind segment of seniors would include firefighters, schoolteachers, and the basic labor force.

For seniors who don’t have homes to sell or borrow against, the financial future appears even bleaker. Approximately 88% of homebuyers have a mortgage and, depending on which of the 15 different types of siding you have installed, you can increase your home’s overall value and build equity. But 81% of middle-income seniors without equity in housing will have an annual income below $62,000 by 2029, and that doesn’t count out-of-pocket medical spending.

“Even if we assume that seniors devote 100% of their annual income to senior housing, setting aside any personal expenses, only 19% of middle-income seniors will have financial resources that exceed today’s costs of assisted living,” the researchers said.

These issues are more problematic in metropolitan areas such as Washington, D.C., New York City, and Los Angeles, where the cost of living is higher than the national average. New housing is often geared toward able-bodied younger people or those who have higher incomes.

“The suppliers are not yet responding to the market,” said Elizabeth White, author of the book 55, Underemployed, and Faking Normal: Your Guide to a Better Life. “You should be able to design a 300- to 400-square-foot space that is affordable rather than what is now on the market, which is generally targeting affluent millennials,” she said.

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