Monday Morning Thoughts: The Emerging Senior Housing Crisis

Coastside Senior Center, Half Moon Bay, CA

An interesting article appeared last week in the Bisnow Bay Area news site.  The article finds: “Seniors in the Bay Area already have limited options in a tight housing market, and for those in need of affordable housing, the situation borders on a crisis.”

The problem, as you might have guessed, is the demand for senior housing has increased as more baby boomers age, but affordable senior housing has become more difficult to find because “affordable housing funding sources target families and other vulnerable populations.”

Seniors are seeing huge numbers, with the population of seniors in California “expected to increase 112% from 1990 to 2020. This demographic is expected to grow twice as fast as the state’s overall population…”

As we already know, the end of redevelopment funding has hammered affordable housing across the board.  But you might not know that, in 2012, the HUD 202 federal program, which once provided $700 million in funding, “stopped funding new affordable senior housing.”  The result was that thousands of projects were stopped.  That program gave capital grants to offset operating costs and cover the cost of housing for extremely low-income seniors.

The result is that thousands of units of housing, that could have been built, were not.

Proposition 13 is also harming seniors.  The policy “was meant to protect seniors and homeowners from increasing property taxes that they couldn’t afford, but ended up trapping seniors in their homes.
The problem: seniors who sell their homes have to pay taxes on today’s property assessment during the transaction, making the sale expensive.”

“These are Prop 13 prisoners. Seniors are rattling around in large homes that they bought in the ’60s, ’70s and ’80s and can no longer afford to move,” Bay Area Council Senior Vice President of Public Policy Matt Regan said. “In a normally functioning cycle, these houses would go back to younger families.”

The result is that in places like San Francisco, production of senior housing has plummeted.  The article notes that, while affordable housing production increased by 83 percent in 2017 in San Francisco, only three percent of it was for seniors.

And where senior housing has been built, it has been the wrong type of senior housing.  The article notes: “For-profit developers jumped into assisted living thinking that this category of senior housing would fill up quickly, flooding the East Bay with assisted living campuses.”  But many of these ended up with high vacancies, as seniors chose independent living options over assisted living.

They found: “Seniors are waiting later to move into a designated senior housing development. Just because someone turns 55, doesn’t mean they suddenly want to live in a senior development.”

Seniors who are still active want to stay active and not go into a nursing home.

There is therefore huge demand for those seniors “seeking to continue living independently.”  For one such development in Oakland, the first senior housing built in over 25 years in the neighborhood, “[d]emand was so high, it leased up within six months, compared to an average of a year for senior housing.”

The article further found that “seniors aged 80 and older are the fastest-growing resident demographic of affordable senior housing. This has shifted how and in what way affordable housing developers offer services and where they build their projects.

“Developers are finding ways to meet the growing needs of the Bay Area’s senior population. Unlike affordable housing for families that typically needs to be near transit and requires more parking, senior housing doesn’t have a high parking requirement and typically needs to be close to healthcare services,” the article finds.

One solution is a continuum of care.  For example, Eden Housing “offers enhanced affordable housing so residents can stay healthier for longer. This often means offering healthcare and supportive services. Many of its residents can’t afford assisted living and were priced out of that market.”

A number of options allows residents to stay in their homes and age in place.  “PACE is a community-based healthcare model that typically offers in-home care and social services.”

“The healthcare piece of this is super-important,” a director explained. “It costs so much more to put people in a nursing home than to opt them into something that keeps them independent. We should want to do more.”

Then there is BRIDGE Housing, which has been creating “intergenerational housing that has senior living as well as housing for young families. Seniors often feel energized by having young kids around and multigenerational families can live close together.”

Matt Regan argues that one of the best solutions to create more senior housing would be to make it easier for homeowners to build ADUs (accessory dwelling units), which are smaller secondary homes built on the same lot.

“Sooner rather than later, we’ll have ADU saturation somewhat similar to Vancouver, where a third of homes have an ADU,” Mr. Regan said. “It is the single biggest supply of affordable housing.”

If 10 percent of the Bay Area’s million and a half homes added ADUs, that would create 150,000 new homes, Mr. Regan said. “We think this will be very beneficial to seniors,” he said.

Of course, the problem in San Francisco and the Bay Area is worse than elsewhere.

The article notes: “Even with developers and policy groups working to build individual senior housing projects, demand will only get worse, especially as all demographics and income groups struggle to find adequate housing. Low-income for individuals is now $82K in San Francisco, the highest individual low income in the country…”

The result is that only one in five households can afford a median-priced home in the Bay Area.

That may be a Bay Area problem, but it figures to put additional housing pressure elsewhere.

—David M. Greenwald reporting


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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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47 thoughts on “Monday Morning Thoughts: The Emerging Senior Housing Crisis”

  1. Eric Gelber

    Just to be clear, this article has nothing to do with WDAAC. WDAAC does not offer the supportive or health services of a “continuum of care” community. It is housing, not a PACE program. It is not an inclusive, transitional BRIDGE program. It is not housing with ADUs. It’s simply segregated housing that excludes households based on age and other criteria.

      1. Ken A

        It was supposed to be a joke (that Eric didn’t get) despite what the developers and PR firms tell the voters we are not going to be stepping over seniors sleeping in the streets if the WDAAC is built.  Like Eric I am not a fan of age restricted housing (or gated communities), but I am not going to cry myself to sleep if the WDAAC is built and restricts some people from moving in (or if the Cannery and/or Lake Alhambra became “gated”)…

        1. Ron

          Ken’s 8:11 a.m. comment is down below, guys!

          The comments do not necessarily appear in the same order that they’re posted (e.g., if someone “replies” to another comment).

  2. Ken A

    I’m wondering where David found the quote: “Seniors are seeing huge numbers, with the population of seniors in California “expected to increase 112% from 1990 to 2020”.  Why not just tell what the population increase “is” in 2018 332 months since 1990 rather than say what they are “expected” to be 16 months from now in 2020?

    Seniors are not “trapped” in their homes since a couple can not only sell a home they bought for $200K for $700K and not pay a penny in capital gains tax, they can sell the $700K home and buy a smaller $500K home in town and not only keep the $200K tax free but pay the same low Prop 13 property taxes thanks to Prop 60 that “allows homeowners who are 55 years of age or older to sell their primary residence and transfer the base year value of that property to a replacement residence”.

    Sure there some “seniors” that have made decade after decade of bad choices who are in a bad place but as a group “seniors” have more money than anyone else and have less people having a hard time finding housing (no group has more people that own their homes free and clear).  Using the word “crisis” is a bit of a stretch (we probably have single apartment complexes in town with more young people “couch surfing” than we have “seniors” “couch surfing” in the entire city).

    1. Howard P

      Am suspecting the data they want to cite is UC Census data… a decennial “bookmark”… and using 20 years is easier, mathematically (for those who don’t have calculators… still seem to be some who either don’t have, or choose to not use).

      Think the estimates are good enough, depending on data sources… even the US Census is not 100% accurate… the mortality/longevity rate doesn’t change too much in a two year period… actuaries may want to agree/dispute that.  They (inc. SSA, health organizations, etc.) are probably damn close to being able to project how many “seniors” (which is even a “squishier” thing than the numbers, depending on source)… some say “senior” starts @ 50 (AARP), some @ 60, some @ 62 (Amtrak), some @ 65 (traditional SSA), some up to 67 (SSA for the younger boomers)… by three of those measures we are seniors… by two, we are not…

      Probably will be accused of “white privilege”, or something else, but my reality is that no members of my direct family have had financial stress about ‘senior housing’, or ‘retiring in place’… I realize that is not true of others, many do.  Have never heard of it in Davis.  Maybe it exists…

      Eric is right… WDAAC is not a local “solution” for all reasons cited.

      Ken is also right, to an extent, as I seem to recall [not 100% positive] that over the past few years, seniors can transfer at least a part of their prop tax thing (and they don’t have to deal with cap gains on sale of primary residence).

      Weird how this is a Davis issue now, brought up by the VG, unless meant as a “call to action” for BA communities, and/or as a “it’s for the seniors” plea for contributions to fund additional housing…

      Our (spouse and mine) grandparents, and parents all owned their own homes, and “retired in place”… including our parents in San Mateo, and spouse’s in Marin.

      Publication of this here and now “is a puzzlement”…

  3. Ron

    Oh, cmon.  Another “crisis”?  Which ended up focusing on an article regarding the Bay Area?

    Right – the Vanguard isn’t “indirectly” taking a position on the WDAAC.

    As a side note, are the WDAAC developers the same ones who were trying to convince the city to sell them a city-owned greenbelt for development in Wildhorse, a few years ago?

    From article:  “The problem: seniors who sell their homes have to pay taxes on today’s property assessment during the transaction, making the sale expensive.”

    This is why some advise seniors to rent out their homes (if they want to move), instead of selling them.  (When seniors ultimately pass on, their children can then “inherit” the same low property tax on the home that their parents had.)

    1. Ron

      Also – regarding senior married couples:  I understand the following.  However, I may not post links to verify this, so it’s up to others to verify/confirm the following, if they so desire:

      If one of the married seniors passes away, the survivor receives a partially-stepped up basis, if they choose to sell.  (Death of one is probably a major factor for many, when deciding to sell.)  What that means is that the first $250,000 of the “gain” on the sale of a primary home is tax-free for the survivor.

      Not sure how this works, in the case of trusts.

      It will be interesting to see what happens, if the proposal to allow seniors to transfer their property tax basis (to any other home in California) passes, this November (see link, below).  Certainly, those in the real estate industry are interested in generating “turnover”. It seems highly likely that this will encourage seniors to move to communities in cities other than the one that they currently live in.

      https://www.planetizen.com/news/2018/06/99251-california-realtors-hope-ballot-initiative-will-put-more-homes-market

      1. Ron

        Actually, in reviewing Ken’s comment, I believe that the first $500,000 of the gain on sale of a primary home for senior couples would be tax-free (whether or not one of the seniors dies).

        My original comment (regarding a partially-stepped up basis) might apply regarding a secondary (not primary) property.

        Lesson – consult an advisor! (Or, at least review and post links.)

         

    2. David Greenwald

      The article wasn’t necessarily about Davis or WDAAC.  But the more data and info people have, the more they can decide.  I’ve already pointed out several strengths and weaknesses in the project.  Not sure why everyone is doing cartwheels at this point.

  4. Todd Edelman

    Downsizing in Place – Accessory Dwelling Units, complemented by restrictions on parking. Students and others who choose to or not a car would be completely happy with this. Homeowners who don’t want to get rid of their belongings can put them in storage spaces in industrial sites next to the noisy and stinky I-80 for far less than the rent they’ll get from the ADU.

    It would be lovely if Bridge Housing – or a similar entity – got on board now with the re-development of the Civic Plaza-DJUSD admin. space as a positive alternative to WDAAC, the proposed living museum of antiquated, anti-sustainable planning and elder-body storage.  This location’s so great, and housing demand so high that I am sure private automobile parking can be kept to a minimum — something the immediate neighbors are justified in demanding. It’s a no brainer to have a comprehensive clinic on site and both Kaiser and Sutter Davis are closer to Downtown then are most hospitals to active and assisted retirement communities around the country.

    A huge amount of housing serving multiple interests could be created in close walking distance to Downtown with minimal transportation impacts.

  5. Matt Williams

    When I was growing up, close to 50% of the kids I knew lived in the same home as one of their grandparents (rarely two grandparents though).  That wasn’t quite “the norm” but close to it.

    Perhaps we should consider turning back the clock and have grandparents move back into the same residence as their children and grandchildren.

    It would make a huge dent in the senior housing shortage and provide growing children with outstanding role models.

    It would also make housing more “affordable” for both the middle-aged parents and the senior grandparents.

      1. Ken A

        Back when Matt and I were kids many people had a grandparent that needed a little help come to live with them.  Today the number boomers who made bad life choices is so much higher than in the previous generation many that need help are moving in with their parents (not the other way around).  I have read a bunch of articles on this  (along with the crazy high number of slacker young men spending their entire 20’s living with mommy & daddy) and this one came up with a quick Google search:

        “For seven years through 2012, the number of Californians aged 50 to 64 who live in their parents’ homes swelled 67.6% to about 194,000, according to the UCLA Center for Health Policy Research”

        http://www.latimes.com/business/la-fi-adults-in-parents-home-20140421-story.html

        Maybe the WDAAC can build some units designed for seniors who still have their unemployed 55+ kids living with them…

        1. Howard P

          Not all “boomers” in hard times today, made bad decisions… not even all ‘white’ boomers… many boomers, white or not, were not in a position to have “good” decisions…

          Yet many (not majority) ‘boomers’ feel “entitled” to things their parents never had, and have passed that ‘entitlement thing’ onto their kids, who expect that (plus some), and many will be disappointed to find that they will be in the same situation as their grandparents… not right or wrong, just is… SS and Medicare are in jeopardy… pensions do not exist for them… 401 k’s, Traditional IRA’s… think 2008, think 1929…

          Twenty years from now…

          Yet, we have some “history”… elders/seniors living with their family, “returning the favor” (old model), and current events… the children of the boomers coming back home… not to care for parents, but to be cared for…

          No answers here, but observations…

        2. Ken A

          When Howard says: “Not all “boomers” in hard times today, made bad decisions…” I’m wondering how many boomers he knows that went to college (when it was practically free), and waited until they bought a home (when nice ones were under $100K) before having kids and didn’t go deep into consumer debt (or think insurance was a waste) that “are having hard times today”.

          No generation in the history of the world has had it easier than the boomers and anyone were born between 1945 and 1964 that is “having hard times today” made lots and lots of bad decisions over the years…

    1. Howard P

      Difference, Matt (agreeing with what I think was your main point)… maybe…

      Were the grandparents living with the family (family covering the main costs) or was it vice versa (grandparents supporting the grandkids), in your ‘growing up’ stage?

      Perhaps we should consider turning back the clock and have grandparents move back into the same residence as their children and grandchildren.

      Historically you are right… somewhat… my Grandmother moved in with her daughter, after Granddad passed… most usual, in my ken, was children (not grandkids) inviting their parents into their home… a reasonable option…

      But a grandchild depending on a grandparent? Really?  Happens, but hardly a goal..

      A 30 year old grandchild, having a grandparent (maybe 80’s) in their home while they are in their prime earning years?  I think not.  Happens, but hardly a goal…

      One generation caring for/living with a parent is one thing… two generation expectation is another… unless the kids are little… seen that in our family, but there were separate living quarters on same site, and still, there was a lot of conflict…

       

       

      1. Matt Williams

        You read more into my three generations living together example than was intended.  My experience/observation was that the parents were the nominal “bridge” between the grandparents and the grandchildren.  It wasn’t grandchildren depending financially on the grandparents, but rather the grandparents assisting the parents in the raising and education of the grandchildren … sometimes with monetary resources, and often with non-monetary resources.

        In many cases there are only two generations involved, and the structure(s) of the relationship are many and varied.  I recently met a mother and daughter who live in the same house … one that was built to their specifications for them.  The mother has an apartment within the house with its own kitchen, and contributed both to the construction costs of the house and the monthly housing expenses. Their arrangement made the cost of housing more affordable for both of them.

  6. Ron

    Kind of surprised that the Vanguard hasn’t discussed the probable impacts of the proposed/probable “expansion” of Proposition 13 benefits, for seniors.  Could even impact the WDAAC, since this will enable seniors to be more “mobile” (e.g., make the WDAAC more attractive for those from outside of Davis, including retirees from the Bay Area – flush with cash). Assuming, of course, that they can negotiate whatever “controls” there are at the WDAAC to supposedly prevent this.

    http://nymag.com/daily/intelligencer/2018/05/ca-property-tax-initiative-could-be-another-boon-to-gop.html

  7. Howard P

    Did you read your cite, Ron?

    … by taking a loophole in the original system that allowed property owners over the age of 55 one home sale without losing Prop 13’s benefits,…

    Makes the rest of your post, at least regarding seniors, more than a bit moot.

    1. Ron

      Here’s another article, which confirms what I just noted (regarding “unlimited portability”):

      “If passed, the proposition would allow senior and disabled homeowners to transfer their low, existing Prop. 13 tax assessment to a new home anywhere in the state, using the option as often as they choose and paying any price for their new home.”

      https://www.ocregister.com/2017/11/27/california-realtors-launch-ballot-drive-to-expand-prop-13-for-senior-homeowners/

      This proposal is actually a pretty big deal, and will have significant fiscal and other impacts throughout the state. (And from what I read, it’s expected to pass.)

      1. Ron

        While looking at the article I just found and posted, I came across this gem (apparently stated with a “straight face”):

        “Suggesting this is a Realtor full-employment act is like suggesting Tesla builds cars just to make money.”

        In any case, the proposition seems likely to encourage moves by seniors throughout the state (including to/from Davis).

        1. Ron

          Well, like I said – each senior would only need to do so, once (for this to have a significant impact).  And, this proposal would allow them to do so throughout the state – with significant tax advantages – regardless if they purchase a more, or less-expensive house than the one that they’re currently in.  (I think that those scenarios are explained in one of the articles I posted.)

        2. Howard P

          Let me approach this another way, Ron…

          Oppose the initiative… vote NO… do something other than trying to tie it to Davis housing and/or WDAAC…

          Alternatively, take advantage of the current/proposed provisions to find a place in a “nice community”, take your Davis equity, your property tax break, and live your dream!

          Marin, Sonoma, Tahoe area come to mind…

        3. Ron

          Gee, Howard.  I didn’t realize that you were so “protective” of the WDAAC (even though you’ve criticized it yourself, as I recall).

          This proposition goes far beyond the WDAAC, but it may have an impact on who ultimately moves there (e.g., whether or not they’re from Davis – which is supposedly a primary purpose of the development proposal).  (Again, I understand that they’re attempting to restrict occupancy to those who have a “connection” to Davis – whatever that means.)

          The proposition would also likely “free up” housing occupied by seniors everywhere, for those who want to move to/from Davis, Marin, Sonoma, Tahoe – or any other area you mentioned. So, in that sense, the proposition should (generally) help to “free up” housing in Davis, as well.

          It will also negatively impact the state’s fiscal outlook, as discussed in one or more of the articles I posted (and are all over the Internet).

          But, not to worry, as I understand that there’s also another/separate effort to put a proposal on the ballot (in a couple of years from now) to eliminate Proposition 13 protections for commercial properties.  (Which would probably have an impact on business viability, statewide.)

           

           

        4. Howard P

          Not protective of WDAAC… I somewhat (not strongly) oppose it … will not vote in favor of it…intend to vote no… but for many reasons other than your apparent ones… your usual MO, to assume someone takes an opposite position, if they challenge your arguments… grow up, please…

          I regale against deceptive arguments, on any side… your shrek fits that criteria…

          Nice demurrer citing the end of split-roll…

          And yes, you will report this as a “personal attack” and/or off topic.  And I care not.

        5. Ron

          Howard:  I’m not planning to “report” your comment, but all you’ve done is here is to cast aspersions (starting with an unexplained challenge regarding the loophole that you mentioned, which would be eliminated by this proposition).

          I haven’t seen a coherent rebuttal from you yet, regarding the actual discussion we engaged in. (Assuming that you’re even attempting to put forth a rebuttal.)

        6. Howard P

          A loophole you cited. As existing…

          Which, according to your first cite, would be expanded…

          Don’t feel a need to rebut an argument with little/no justification.

          Have a good evening.

        7. Ron

          The loophole you mentioned would be eliminated, not expanded.  But, we both ultimately agreed that this loophole (regarding the probability of multiple moves by seniors) was probably not a major factor, regarding the proposition. So again, I’m not sure why you brought it up (as if I had “overlooked” it, which is not the case at all).

          The “portability” (throughout California) is the major factor, as well as the ability to leverage Proposition 13 benefits to another property regardless of whether it’s more, or less expensive than the assessed value of one’s current home. (This later point really surprised me, when I looked at some examples in an article.)

          Have a good evening, as well.

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