Senior Housing: 30% More Older Americans Are Choosing To Rent
Reports quoting the latest US Census data reveal that the number of 65+ aged American households choosing to rent versus owning a home has jumped up by 30% in the past decade.
The number of 55+ rents is also on the rise. So, what’s driving this new trend of finishing life as a tenant? What does it mean for the property market, and investors?
3 Factors Driving More Seniors To Rent Housing In America
1. Affordability
Post-COVID inflation has made everything more expensive. Interest rates are up. Yet, even without a mortgage, homeownership is far from cheap.
Property taxes are up in many areas. It’s not uncommon for homeowners to be experiencing their insurance, repair and maintenance costs, utility bills, and association dues now costing them 30% more than just a few years ago.
Walmart recently revealed that new tariffs have resulted in their stores raising prices every week, with no expectation of that ceasing soon.
That is putting a big dent in personal budgets. Renting can end up being far cheaper. While providing a nicer space to live in.
2. Estate Planning
Culture has changed. Although COVID extended this time period by a couple of years, American households averaged only around 5 years in a home before moving in the early 2000s.
Gone are the days of multigenerational homes, and parents passing on homes to their kids, and their kids, who would live in them.
Rather than have their kids simply firesale off their lifelong homes to the first cash buyer upon their death, more parents may be seeing the wisdom in selling early.
Cash can then be more easily spread among heirs. Or these funds can be invested in income producing rental properties or other assets that may provide better, for longer, for the next generation and other causes they want to support as a part of their legacy.
Taking advantage of other financial vehicles and gifting over a period of time may help lower tax hits to estates as well.
3. Liquidity
Life seems to have become very uncertain and unpredictable in recent years. There seems to be no telling how strong the stock market will remain during retirement. Nor how high healthcare costs will soar. Renting gives seniors more options and flexibility with their life savings.
What It Means
This substantial leap in the number of senior renters is spiking demand amid tight supply. As America’s population ages in a significant wave, this trend is expected to stick around.
Limited supply in this space means low occupancy rates, more choice of the best tenants for landlords and senior housing operators, as well as great potential for rising asset values and rents.
Consider that many seniors may easily go on to live another 30, 40, or more years, and this is a captive customer base of long-term tenants, which can provide steady income for real estate investors.
There are many classifications of assets to pick from in this space. A lot of additional value can be created and unlocked by those adding additional levels of service, as with assisted living facilities.
How will you participate in this trend?
