Seniors are an increasingly important multifamily renter cohort, especially for smaller properties. Some retirees are choosing to downsize and rent for lifestyle reasons. Other seniors are working — and renting — longer.
How Big is the Seniors Renter Market?
Seniors — including people 65 years of age and over — are 14.5 percent of the population. Their share is growing as the Baby Boom generation (those born between 1946-1964) ages, and will continue to grow thanks to birth rates exceeding 4 million individuals a year between 1954 and 1964.
Seniors are homeowners more than renters. At 77.9 percent, seniors have the highest homeownership rate of any of the major age cohorts according to the Census. As shown below, seniors are only 10.9 percent of the country’s renter population.
The concentration of seniors in rental housing varies significantly between small apartment buildings (7.6 percent) and large buildings (21.7 percent), which are more centrally located and have a richer set of amenities. While seniors are underrepresented in small properties, their share of this market is growing faster than at large properties.
As shown above, while the general population of seniors increased at an average annual growth rate (AAGR) of 3.4 percent between 2010 and 2014, the population of seniors living in small buildings grew at 3.7 percent, compared to only 2 percent in large buildings. In part, this may reflect that growth in the number of renting seniors is bolstered by income constraints.
What are America’s Seniors Doing?
An increasing share of the seniors renting population is also working later in life. The share of working seniors has risen to its highest level since the early 1960s, before the enactment of Medicare.
As shown above, at a slightly higher than 15 percent share, the number of working senior renters in small buildings in 2014 was almost twice that of renters in large buildings.
Significantly, this share has crept up in the post-crisis period by nearly 1 percentage point across both small and large buildings, which going forward represents an important growth segment for apartment property owners.