Senior Housing Affordability Is A 'Slow-Moving Crisis’ That Requires Major Public Investment

As the baby boomer generation reaches retirement age, years of stagnant wages and worsening wealth inequalities are leaving millions of seniors unable to afford housing. 

A substantial amount of affordable senior housing will need to be developed to accommodate this population, but that type of housing typically requires the most public subsidies, as many renters have little to no income.

Housing developers and public officials speaking Tuesday on Bisnow's Mid-Atlantic Senior Housing digital summit highlighted the scale of this growing crisis and the level of public investment that will be required to address it. 

Enterprise Community Development President Brian McLaughlin said the stagnant level of wages for many jobs in retail, education, healthcare and other professions has left millions of Americans struggling to afford housing throughout their adult years.

"Folks are barely able to afford where they live in their 30s or 40s, of course they’re not going to be able to afford the new product being built today when they get to their 60s and 70s," McLaughlin said. 

"There's this crisis, this slow-moving crisis that we don’t talk about enough, which is that the most revered folks of society, the ones who taught our kids when they were younger, who cared for us when we were in the hospital, who served us at Macy’s at some point, they should be able to gracefully live out their final years in our country, and we don’t do a good enough job paying attention to their needs now," McLaughlin added. 

Population data clearly shows a coming surge in older Americans, especially those that struggle with housing costs.

The number of U.S. household heads age 80 and above is projected to increase from 8.1 million in 2018 to 12 million in 2028, and then to 17.5 million by 2038, according to a 2019 report from Harvard University's Joint Center for Housing Studies. 

The report found that the number of cost-burdened households age 65 and over, those that spend 30% or more of their income on housing, reached an all-time high in 2017 of nearly 10 million. Around 5 million of those were severely cost-burdened, spending at least half of their income on housing.

In the 50-64 age group, the report found similar cost-burdened rates, leading it to conclude that the problem will persist in the coming years as that group reaches retirement age. It attributed the record-high cost burdens to the Great Recession leaving adults with lower incomes and rates of homeownership, and to the increasing disparity between the highest income earners and the rest of the population.  

Without a significant increase in senior affordable housing development, portions of this population could be left homeless. A 2019 University of Pennsylvania study, which researched New York, Los Angeles and Boston, projected that the number of homeless seniors in each of those cities would nearly triple between 2017 and 2030. 

"There’s a bell or a siren sounding, and I think we choose not to pay enough attention," McLaughlin said. "I hope we begin to listen a little more and think about how we’re going to get in front of this."

Fellowship Square, a nonprofit developer with a mission of providing affordable housing for older adults, has 670 apartments for low-income seniors in Maryland and Virginia, CEO Christy Zeitz said. She said Fellowship Square's waitlist is three years long, and some residents have waited longer than that to move into one of its buildings.

She said there is a wide gap between what those seniors are able to pay for housing and how much it costs to build more units, meaning it would require significant public investment to satisfy the demand. 

"Affordable senior housing doesn’t happen without the subsidies, especially at the local level, especially for people who have no assets, no income," Zeitz said. "We’re serving people who make less than $15K from [Supplemental Security Income], and that's all they’re going to have."

Fellowship Square and Enterprise Community Development broke ground in October on the redevelopment of the 1970s-era Lane Anne House senior living community in Reston into a new 270-unit building. The project used multiple public funding sources, including Virginia Housing and the Fairfax County Redevelopment and Housing Authority. 

Finding new land to build senior affordable housing can often be difficult, Zeitz said, given the competition from market-rate apartment developers that bring in greater revenues from their tenants. 

"As a nonprofit developer, we're paying the same cost as for-profit developers for land, acquisition, site development, construction, you name it, and our units only pay a couple hundred bucks sometimes for the rent," Zeitz said. "So you’ve got to have subsidies to make it happen."

McLaughlin also said public investment is required to house low-income seniors in any area, whether in the city or the suburbs, so the jurisdictions need to work together to create affordable housing. 

"You’ve got to have subsidy to do this," McLaughlin said. "No matter where you find the land, you need subsidy. So this is about the partnerships with federal and locals and figuring out how we can close the expensive gap between what it costs to do this and what you can bring in from the operations of it." 

The D.C. government provides subsidies for affordable projects through its Housing Production Trust Fund, which typically deploys at least $100M every year, and the D.C. Housing Finance Agency provides debt for those projects. Roughly 6% of DCHFA's 14,000-unit portfolio is senior housing, DCHFA Executive Director Christopher Donald said. 

DCHFA also finances projects that receive federal subsidies from the Department of Housing and Urban Development, and he said it has a new financing tool focused specifically on senior affordable housing. 

"Our affordable assisted living product is new, and it's been quite innovative," Donald said. "It's something that's needed in our marketplace."

Donald said it is challenging to find land within the District's 68-square-mile boundaries to build affordable senior housing. And buying land for a new project often costs $50K to $70K per unit, meaning at least $5M for a 100-unit project. 

"The good Lord in his infinite wisdom is not creating any more land here in the District of Columbia, so unless the feds start giving up some, it’s going to be very difficult," Donald said. "A significant part of your cost structure is going to be the land itself."

He said federal subsidies are needed to help cover the expensive cost of building affordable senior housing in D.C. 

"The city can’t be the only pocket you’re reaching into," Donald said. "We’ve got limited resources at some point, and the demand is always going to outstrip the supply of land and soft funds, so we’ve got to keep working together to figure this out."

DCHFA has financed three affordable senior housing projects that are underway in the District.

The agency provided $50M in bond financing for the 152-unit Livingston Place at Southern project. The development from Dantes Partners and Gilbane Development Co. is near the Maryland border in Ward 8. It broke ground in November 2019, and Donald said it will deliver this summer. 

It also provided financing for the 38-unit Todd A. Lee Senior Residences, named after the former DCFHA executive director who died in January 2020 at age 51.

The project at 809 Kennedy St. NW broke ground in February 2020 and is also delivering this year, Donald said. 

In September, Gragg Cardona Partners broke ground on the 157-unit Residences at Kenilworth Park affordable assisted living project in Ward 7, using $58M in bond financing from DCHFA. The project is scheduled to deliver in Q3 2022. 

Gragg Cardona Partners partner Oussama Souadi said he wanted to focus on providing senior affordable housing in the city's most underserved neighborhoods where the need is greatest. 

"We know the demand is very, very strong, and the need is broad across all eight wards, but the need is greatest, as we saw in the Medicaid data, on the east side of the river, Ward 7 and 8, where the need has been unmet for decades," Souadi said. 

He said it is important to provide this type of housing across the city and the region so seniors can stay in the neighborhoods where they have lived for years and be close to their family and friends. 

"If they’re under-housed or underserved, we don’t want them to have to traverse the city diagonally to get to a place where they’ll get the services, or they’ll forego the social network," Souadi said. "Geographically we want to go to where the demand is so the roots of the social connections aren’t uprooted, so we went to Ward 7 and Ward 8 where demand is greatest."