Ivan Kaufman’s Real Estate Blog
Originally posted on Arbor Loan Express
It’s clear that due to recession, the US saw an uptick in the trend of delayed retirement in seniors across the country. Working past the age of 65 no longer was an exception as seniors continued working into their late 60s and 70s. Since the financial crisis, this trend has created a growing demand segment for small apartment building owners.
Most Senior Householders Depend on Retirement Income and Entitlements
The chart below shows how a new normal for labor participation rates among those 55 and older formed during the recessionary years.
While this is a rising trend for apartment renters, an overwhelming majority of senior renters (age 65 years or over) do not work. Instead, they pay for their housing expenditures with income derived from retirement funds, investments, entitlements and other government assistance programs.
As shown below, only about 18% of senior householders in small apartment buildings worked in 2015. In large buildings, an even lower share of 10% of seniors worked. The large building segment has historically supported a larger share of affordable housing and rent control components.
The Financial Crisis Delayed Retirement Decisions
While retirement dominates the senior renter segment, the latest data from the Census Bureau indicates some structural shifts underway in the labor market over the post-crisis period. These changes are working to reshape demand fundamentals for this group.
As shown below, the working senior householder segment in apartments grew twice as fast as overall household growth across all apartment types between 2010 and 2015.
Households with a working senior householder grew at an annual rate of about 6% across both small and large apartment buildings. However, retiree household growth was lower compared to the overall growth.
The above bears great significance for apartment demand because retiree households make less than half of the income of their working counterparts.
Following this growing trend will be critical for apartment property owners. This will lead to a greater need for age-sensitive amenities that may facilitate longer-term tenancies and rent-roll stability.
For more information on demographic trends in the senior housing and healthcare market, be sure to check out our recent webinar hosted by Seniors Housing News.
The program starts off with an in-depth conversation on demographic demand drivers led by distinguished professor and economist Sam Chandan. After reviewing how this demand is impacting property fundaments within independent living, assisted living and memory care facilities, Arbor finance experts explain how a unique combination of Bridge and FHA loans can benefit senior housing operators.
This week’s collection of multifamily news stories examines how understanding local renter demographics can lead to smarter investments and greater returns. First, National Real Estate Investor covers how to identify recovering metros that show potential for growth. Next, Multifamily Executive explores how studying renter psychographics can provide valuable insights on preferences, and ultimately help you raise your rent. Chandan Economics weighs in on the importance of understanding how age and gender are determining factors for what single renters look for in multifamily spaces. City Lab reports that meeting the needs of all age groups is becoming increasingly crucial, as more Americans choose to age in place. Lastly, Property Management Insider provides us with a look at how loan programs are offering discounts for “green” apartments and absorbing some of the costs that come with making properties more energy efficient.
National Real Estate Investor – October 4, 2017
“Property values have surged steadily higher in the prolonged recovery. But that high tide isn’t raising all boats as some metros are still falling short of 2007 pricing.”
Multifamily Executive – September 29, 2017
“These four strategies will help you determine the right specs and amenities to attract your target renters.”
ALEX Chatter – October 2, 2017
“While single renters constitute close to half of the demand within small apartment units, their growth has been faster in larger buildings, where preferences by both age and gender play a significant role.”
CityLab – October 5, 2017
“The vast majority of older Americans—more than 70 percent of those over 50, according to a 2014 AARP survey—plan to “age in place,” or stay in their homes or communities.”
Property Management Insider – October 2, 2017
“Lower interest rates and larger loans are fueling energy conservation inside multifamily housing operations across the country, bolstering the bottom line of owners and the wallets of residents.”