Monday Morning Thoughts: The Emerging Senior Housing Crisis

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

Get Tickets To Vanguard’s Immigration Rights Event