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Seniors Housing Industry Needs Solutions for Serving Middle-Income Seniors, NIC Research Shows

An upcoming NIC study looks at the demographic of middle-income seniors that may face a funding gap in paying for seniors housing units.

The clock is ticking down for the seniors housing industry to start addressing the needs of middle-income seniors, who may not have enough funds to afford seniors housing facilities by themselves and may not qualify for assistance from the federal government. The National Investment Center for Seniors Housing & Care Industry (NIC) will release one of its first studies on that demographic, which NIC researchers call “the forgotten middle,” in April. The goal of the study is to bring into focus the gap in affordable housing availability for middle-income seniors, quantifying the need and demand for this segment of the market “to allow the private and public sector to discuss solutions” based on the findings, says NIC’s Chief Economist Beth Burnham Mace.

The report will quantify the need for seniors housing in the middle-income market, the number of people in that group and its demographic characteristics, including the estimated number of middle-income seniors with mobility limitations, chronic conditions and cognitive impairment today and up to the year 2029.

NIC’s hope is that the private investment sector will become part of the solution to serve this group of individuals. “Our theory is that the highest income cohorts have sufficient funds to take care of themselves as they age, and the lowest income tier cohort most likely has sufficient help and services provided by the federal government. The middle group or ‘forgotten middle’ needs support and other options for care and housing as they get older,” says Mace.

The timing of this study is based on the seniors housing being at the very beginning cusp of this need with the baby boomer population, born between 1946 and1964. “As the oldest baby boomer is now 73, the surge of the demand is just around the corner, with real growth taking off in 2029. We are trying to get a window into the future because otherwise the public systems such as Medicare and Medicaid will be overburdened by this population,” Mace notes.

To date, this will be one of the first studies that will look at combined housing and healthcare needs of middle-income seniors. Other research may have focused on middle-income seniors’ housing or healthcare needs alone, “but we’re combining both needs in the study,” said Mace. The physical structure and design of seniors housing properties may change to offer opportunities for this sector. The study will look at demographic statistics of how many people will require the kind of housing designed to assist with health needs such as special mobility, and those with cognitive impairments who will need more memory care units.

The data will be based on a study called the HRS, the Health and Retirement Study, a long-term report sponsored by the National Institute on Aging and the Social Security Administration and conducted by the University of Michigan. The data on aging Americans used in the report has been collected since 1990.

Today, finding basic data on the number of seniors housing facilities that cater to the middle-market demographic, as well as tracking investment sales transactions involving those types of assets, remains difficult, according to Barbara Byrne Denham, senior economist with research firm Reis Inc. “Many seniors housing facilities may not disclose whether they market to middle- income people,” she notes. “Newer facilities may be even less transparent about marketing.”

While there’s plenty of capital currently available for the development of seniors housing facilities, including loans sponsored by Fannie Mae and Freddie Mac, those facilities may not necessarily be affordable, according to Ely Razin, CEO of financial data provider CrediFi.

“The supply is there, meaning the availability of housing may be sufficient, but affordability is a different question,” he notes.

However, there are several government programs that currently provide loans to private companies to build or redevelop properties that would qualify as affordable seniors housing, Razin adds. On example is the Low-Income Housing Tax Credit (LIHTC) program, which grants developers tax credits for building seniors housing facilities. The Federal Housing Administration (FHA) and related groups are other public entities that pump money into the development and financing of affordable seniors housing facilities.

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