• Those 65 and older will be the fastest growing group in the U.S. through 2050.
  • Baby boomers plus older groups, the “Silent” and “Greatest” generations, have different needs.
  • They’re shunninng institutional settings in favor of walkable, amenity-rich communities in cities or close-in suburbs.
  • Conflict is coming as seniors compete with younger residents for scarce government resources.

RiggsSeniors_1_351Often overlooked as developers and planners study the market demands of a youthful Generation Y is the fact that the fastest-growing age group in the U.S. in the population age 65 and older, which will increase by 120 percent by 2050, says John K. McIlwain, ULI Senior Resident Fellow/J. Ronald Terwilliger Chair for Housing.

These aging but active baby boomers, as well as the generations before them, are creating new opportunities and challenges for the U.S. housing industry in terms of meeting the diverse lifestyle needs of people in various phases of their senior years, according to a new ULI publication authored by McIlwain and released Oct. 17 at the ULI Fall Meeting in Denver.

Housing in America – The Baby Boomers Turn 65 explores the housing market changes that will occur as the leading edge of the baby boom generation turns 65; and as the Silent Generation (aged 67 to 84) and the Greatest Generation (aged 85 and older) make housing choices for their elderly years. Because of differences among those groups, “senior is not a useful term anymore,” McIlwain said.

“The combination of the leading-edge boomers reaching 65 with expectations of a longer life than ever before, and the fact that many of the Silent and Greatest generations are running through their limited retirement savings — combined with a continuing reduction in federal and state resources for housing subsidies– is leading to a coming crisis in U.S. housing for those over 65,” he said.

The world’s population aged 60-plus is expected to reach 1.2 billion by 2025, and almost 2 billion by 2050. The 65-plus population in the United States, which totaled about 40.3 million in 2010, is expected to reach 54.8 million – a 36 percent growth rate – by the end of this decade, as 40 million baby boomers turn 65.

The combination of aging baby boomers and those older than boomers has created not one single market segment, but a variety of market segments, notes McIlwain. “Over the last two decades, unprecedented change has occurred, and today three separate generations are over 65, each with its own outlook on life and distinct housing needs that are unlike those of past markets for people in their age group.”

Three Generations

  • “Leading-Edge Boomers” comprise the 40 million Americans born between 1946 and 1956, part of a 74-million cohort born in the 18 years between 1946 and 1964. This leading edge will turn 65 over the coming decade. Americans reaching 65 today, as long as they are healthy and do not work in physically debilitating occupations, have a life expectancy of over 90. “These additional 31 years of expected life have not been just tacked on at the end,” according to cultural anthropologist Mary Catherine Bateson, who is quoted in the ULI report. “Today’s 65-year-olds are starting new careers or continuing old ones, traveling around the world, and eloping with new loves, in a stage of life we are calling ‘Adulthood II.’”
  • The study cites surveys showing that the majority of older Americans want to age in their current homes, even when they need assistance. Others are remaining in their homes – at least for the time being — because of the difficulty selling in the current housing market. However, many who are able to move are choosing urban locations – both cities and suburban “town centers” – where they can be close to grown children, friends, work, public transportation, and health care. “Leading-edge boomers will not settle gracefully into quiet retirement and move into traditional seniors housing communities for years, if they ever do,” McIlwain said. “This is not a generation that is looking forward to moving back into a dormitory or other institutional setting,” he adds.
  • Boomers are not alone in developing an antipathy to institutional living. They share this sentiment with their parents, the Greatest Generation,” those 4.5 million people 85 years of age and older who are living longer than any prior generation. Over the next decade, most of this cohort will have significant health care needs and require an array of personal services.
    While many in this generation enjoy adequate retirement savings, supportive families, or both, many others have limited financial resources and/or family support.
  • To preserve their retirement funds and independence, the Silent Generation is shunning traditional suburban senior housing communities; as a result, the average age of new residents at these communities has risen to 84. Those older Americans unwilling to leave their suburban homes or unable to sell them are creating “naturally occurring retirement communities” that will need increasing levels of government-funded services in the years ahead.
  • Caught between the leading-edge boomers and their parents is the Silent Generation, the 28 million Americans ranging from 67 years of age to the early 80s. With one foot in the culture of prior generations and another in the pioneering spirit of the boomers – “think Mick Jagger, Tina Turner, Harrison Ford,” said one industry expert – the “Silents” are exploring new ideas about how and where to retire, from multi-generational cohousing and affinity communities to choosing the more temperate climes of Georgia or the Carolinas over Florida.

Currently, more than half of Americans over 65 live in suburbs, notes the report. Because many people prefer to remain in their own homes as long as possible, or may not be able to sell even if they wish to move, suburbs are expected to continue to see substantial growth in their over-65 populations. Naturally occurring retirement communities are on the rise in the suburbs, requiring increasing levels of support. The report suggests that local governments will be increasingly pressured to provide services to those aging in place. Whether provided in seniors’ homes or at providers’ locations, services for suburban seniors require cars, vans, buses, and drivers. What to expect: more suburban group homes and “virtual villages,” as well as permit modifications for age-restricted communities and the establishment of group homes.

Centrally located urban neighborhoods, including those in downtown cores as well as inner-ring areas, can provide services and amenities – including public transit, health care, pedestrian-friendly streets, arts, culture, ongoing education, libraries, retail stores, and human interaction – that appeal to older as well as younger residents. To accommodate a higher proportion of seniors, however, cities may need to make a range of infrastructure improvements such as curb cuts, benches at transit stops, access to bathrooms, slower timing of traffic lights, well-maintained sidewalks, and zoning that allows people to rent out portions of their homes.

The nation’s approximately 50,000 housing communities for seniors – including those providing independent, assisted living, and/or full nursing care – would seem to constitute a growing market, but in reality, are on the decline, notes the report. Since the beginning of the Great Recession, these communities have faced difficulties finding new residents to replace those leaving. This is due in part to the high cost of retirement housing and the fact that many members of the Silent and Greatest generations have insufficient retirement savings. However, other issues are at play, according to ULI’s McIlwain. “No matter how attractive and supportive an institution is, it is still an institution,” he said. These communities’ institutional nature, suburban locations, and existing “old-old” populations make it difficult for them to attract new residents, particularly younger ones. The ULI report suggests “greening” of existing communities to appeal to younger residents as well as investors, while reducing operational costs.

Beyond traditional seniors housing, leading-edge baby boomers and “Silents” are exploring a diverse mix of living options, creating niche markets that could become significant in size due to the large numbers of over-65 Americans who wish to move. These include:

  • College towns, which allow seniors to live near children and grandchildren while enjoying on-campus activities
  • Manufactured housing, an affordable option, but which faces the challenge of locating approved sites in established areas
  • Cohousing and group living, a niche that must be multigenerational to maintain mutual support as residents age
  • Multigenerational living, which is rising at a rate faster than that of overall household growth, but nonetheless is difficult to implement in urban areas dominated by apartment living, and 
  • Affinity retirement communities, which bring people together with shared interests ranging from sports to gardening to culture. The number of retirement communities targeting specific university alumni, for example, has doubled over the last ten years.

McIlwain points to a likely tug-of-war between the housing needs of younger and older generations in the years ahead, as Generation Y, at 80 million, enters the housing market in force. “Stretched as they are financially, the over-65 population is better off than Generation Y, which faces the worst financial future since the Great Depression, while anticipating the burden of caring for all three of the 65-plus generations,” McIlwain said. “How federal and state funding will be divided among generations in an era of diminished federal resources will be a dominant political and policy struggle of the coming decade and beyond.”

When the report was released in Denver, ULI Chairman Peter Rummell recalled his own start in the real estate business some 40 years ago, with the development of Hilton Head Island, South Carolina. At the time, creating a golf course as a real estate amenity was a new concept, he noted. “What’s the new golf course,” Rummell asked, speculating that it will probably include some mix of retail, services, lifestyle amenities, and health care. “That hasn’t been invented yet,” he said.

ULI’s Housing in America study is a joint project of the ULI Terwilliger Center for Housing and the ULI Foundation, which supports ULI’s program of work. The ULI Terwilliger Center for Housing was established in 2007 by J. Ronald Terwilliger, chairman emeritus of Trammell Crow Residential.