Driven by longer lifespans and the aging Baby Boomer generation, the number of older adults in the United States is expected to exceed 80 million by 2040, accelerating the demand for senior living solutions. Professionals in the sector are adapting to provide affordable housing and quality care as demographics shift.
Heather Kolakowski, interim executive director for the Cornell Institute for Healthy Futures and lecturer at the Cornell Nolan School of Hotel Administration in the SC Johnson College of Business, moderated a panel of seasoned industry specialists in a discussion of potential solutions for creating sustainable and inclusive senior living environments in a recent Keynote webcast, “Affordable Senior Living: Challenges and Opportunities Ahead.”
Subsidized or Affordable: What’s the Difference?
Rent-to-income ratios are a key indicator of housing affordability. Financial experts frequently advise families to spend below 30 percent of their income on rent, and those who spend more are deemed cost-burdened.
“We are currently in the midst of an affordable housing crisis, and you probably wouldn’t know that from looking at the housing prices these days,” said Severine Petras, CEO and co-founder of Priority Life Care. “Nearly one in three households devotes more than 30 percent of their income to their mortgages.”
Subsidized and affordable housing are two distinct yet related concepts. Subsidized housing, often supported by the Department of Housing and Urban Development through programs like Section 8, ensures individuals do not pay more than 30 percent of their income toward housing. Affordable housing refers to units that are offered below market rates without government support.
Rising Costs on All Fronts
With rent prices increasing faster than income growth, seniors will have difficulty finding affordable housing options in the future. Jay Woolford, senior vice president at CIRC, questions how providers will meet the growing needs: “As rents go up and the cost of housing continues to go up, how do we fill the gap for people? How do we begin to look at ways to manage housing costs and be able to provide them opportunities for nutrition, for transportation, for healthcare, for access to entertainment?”
Financing senior living facilities is another hindrance, with tax credit investors, opportunity zone funds, and volume cap bonds playing crucial roles. Woolford has explored alternative financing with his own Tukwila Village project, a mixed-used senior housing development project in Washington state.
“We were getting tax credit investors to put in the bulk of the equity for the project. We actually used opportunity zone funds as the final equity piece of that,” said Woolford. “But the struggle now is the availability of volume cap bonds. The demand is outstripping the capacity.”
Senior living management professionals also face rising labor costs and a reliance on government subsidies. With labor being the most significant expense for assisted living facilities, providers must find ways to balance the need for qualified staff with the rising costs of care.
“The bigger problem is operationally making sure that you’re able to meet the extreme demands on an expense side,” said Petras. “When you’re talking about the revenue, we’re talking about relying on a government subsidy.”
Creative Strategies for a Brighter Future
The community aspect of senior living alleviates the heftier burden of healthcare service costs seniors and their families would otherwise face with private care. Maintaining this important benefit for aging adults requires innovative solutions.
Tukwila Village demonstrates how cities can provide land to facilitate the development of affordable housing communities. “The property was actually owned by the city of Tukwila. They had aggregated a little under six acres. And we worked with the city to be able to put this together in order to do affordable senior housing on the property in conjunction with a number of other partners,” said Woolford.
Modular housing, which involves the assembly of prefabricated housing units, can offer a faster and more cost-effective approach to building senior living facilities.
“Manufactured housing has a dirty reputation, especially after a hurricane. But the reality is that new manufactured homes are actually built better today,” said Mitch Brown, principal consultant for Senior Housing Consulting. “The new regulations for building those communities are more rigorous in terms of tie downs and everything that has to happen.”
Watch the full “Affordable Senior Living: Challenges and Opportunities Ahead” Keynote on the eCornell website.