It’s been said that nothing is more certain than death and taxes. That may be so, but another certainty in life that needs to be added to that short list is “change”.
No, I’m not talking about the money you get back when buying an item for $7.99 and paying with a ten dollar bill. Specifically I’m referring to the ever-changing variables in the housing and mortgage markets. The big, 800 ton “Blue Whale” in the topic tank today is the demographic phenomenon of our lifetime. Those of us who were born between 1946 and 1964 are rapidly filling the ranks of senior citizens.
More than 10,000 Americans turn 65 each day, and that trend will continue for the next 15 years. Put in annual terms, there will be nearly 3.7 million more people 65 and older a year from today. Amazing! A report released at the beginning of 2016 by AARP Foundation and the Harvard Joint Center of Housing Studies found that nearly 20 million older adults live in “…unaffordable and unsafe housing.”
This unacceptable reality will be compounded by the fact that nearly 20 million seniors are paying over 30% of their income for housing, and nearly 10 million households pay more than 50%!
So, like the ancient Chinese symbol for the word “crisis”, there are two sides to this housing trend. There’s the challenge side which is self-evident, but there’s also an enormous opportunity.
For example, according to AARP and the above mentioned report, only 1% of the entire housing inventory in the U.S. has the recommended design features needed by older people. These features include the most obvious one like step-free entries, countertops at varying heights, wide doorways, faucets with levers and a shower with no curb and a handheld adjustable shower head.
The bottom line is that there is a lack of housing with the basic features that accommodate and support the aging. Plus, there’s a drastic dearth of affordable housing and services to take care of residents of all ages, incomes and abilities. As property managers with a wide range of experience, clients and connections, we can see the needs and do something about this crisis. The most logical first step is to discuss this trend with our clients.
Show them this article and use it as a talking point for planning purposes. Then speak to local leaders in government, the rental housing industry and non-profits like Habitat for Humanity. Recently I heard of a property manager who found a big church building for sale. After doing her due diligence she led a team of investors and concerned citizens who purchased it for a reasonable price. Then with financing from various government-sponsored and private organization, they rehabbed the building into 12 senior residences ideally suited for senior citizens, especially those with disabilities.
An additional incentive is that interest rates for housing loans are low and may possibly be going lower. Last week, U.S. 30-year mortgage rates finished the week at about 3.6%.
That’s almost as low as mortgage rates fell in late 2012, when they dipped to 3.3%. With international investors expected to buy more U.S. treasury bonds, especially the benchmark 10 year bond that currently yields less than 2%, mortgage rates may drop even more.
Here’s the “perfect storm”; a generational housing shortage at the same time that the cost of borrowing money to build has plunged to record lows. Find out if your area needs more affordable rental housing for seniors. Then start conversations on how to participate in the profitable solution to this epic trend.