A selection of lucky baby boomers seemingly have won the housing market, but they haven't met their final boss just yet—the elusive retirement home. The generation is aging into worn infrastructure, and it appears that senior homes are ill-equipped to deal with the incoming class.
What once was an excess of supply has become a dearth, as the Wall Street Journal warns of a shortage on the horizon. If the current rate of development stays the same, just 191,000 new housing units will be added by 2030—short of the 560,000 needed to usher in the aging population, data service NIC MAP tells the Journal.
While boomers account for a large portion of the nation’s wealth and have been deemed the richest generation, the cohort suffers from immense wealth disparity. Many boomers find themselves aging into a system that is not willing or equipped to care for them, and instead struggle to subsidize their own care while facing an affordability crisis.
In 2021, 11.2 million seniors—about one in three—were cost-burdened, spending more than 30% of their income on housing, found Harvard University's Joint Center for Housing Studies, noting that’s a record high. “Though government programs provide crucial housing assistance to millions of older adults, demand drastically outstrips supply, with years-long waitlists in some areas,” write the report's authors, adding that homelessness among older populations is on the rise.
“We’ve never had a population pyramid that looks like this,” Arick Morton, chief executive of NIC MAP, explained to the Journal. “The senior housing industry would need to develop twice as many units as it has ever developed in any single calendar year every year to keep up.” What's more, the early pandemic pulled the brakes on the housing industry, as leaders tell the Journal of labor shortages and weakened demand.
Developers shirk new projects, complaining of high costs
Years later, developers are still operating at a different pace. Real estate advisory company Green Street tells the Journal that high interest rates and costs of building still keep the industry from meeting said demand. Many seniors are unable to afford private retirement homes, and others who can are opting to age in their home, the company explains to the Journal.
The new projects are often luxury ones that cater to the richest of boomers, developers say to the outlet. That all leaves a large portion of boomers pushed out of affordable housing.
America is an increasingly aging nation. It’s not just putting a roof over seniors’ heads that is an uphill battle; there’s also a strain when it comes to finding care. Nursing homes are dealing with staffing shortages, finding it difficult to retain talent when it comes to an often grueling and underpaid job. Meanwhile the number of adults who will likely need help with basic care (aged 85 and older) is set to quadruple between 2000 and 2040, finds the Urban Institute. Insurance, including Medicare, will also need to step up to meet the influx of needs.
“There’s like a tsunami of people coming into Medicare,” former CVS Health CEO Karen Lynch said of increased need at the Fortune Brainstorm Health conference in 2023. “That’s going to put pressure on the entire health care system.”
