Even as the housing market recovers from the Great Recession, there is still a shortage of affordable housing for older adults. Those aged 55 and older, the Baby Boomers, are living longer and more independently than those generations that came before them. In fact, every day through 2030, 10,000 Baby Boomers will turn 65. Alongside this rapid expansion, roughly 27 million older adults will be earning less than 80 percent of their area median income by 2035. The increase in population size, coupled with the decrease in spending power, creates a deep need for affordable, accessible housing that is well beyond the current market supply.
Other factors also contribute to a lack of affordable housing options, such as a shortage of labor in the construction industry and rising costs of construction materials, combining to make the housing market one with fewer options and higher price tags. The crisis is here. The future of affordable housing hangs in the balance.
Senior Living and Affordable Housing
Genworth’s Cost of Care Survey 2019 finds that seven out of 10 people will require long-term care in their lifetime. The average national cost for an assisted living facility is around $4,000 per month and nursing homes hover between $7,500-$8,500 per month, depending upon the type of accommodation (shared or private) and geographic location. According to The Joint Center for Housing Studies of Harvard University, millions of low-income older households will struggle to pay for appropriate housing and necessary supportive services over the next 20 years, as that money is going toward essential needs like food and medications. These seniors cannot afford to enter the traditional senior living market, including services like independent living, assisted living and skilled nursing care. The nation is now at a critical point for putting in place affordable housing options and care services needed by the most vulnerable older populations over the next two decades.
The Future of the Senior Housing Market
To understand the future of the affordable housing market, we need to look at the past. From the 1980s through the early 1990s, nonprofit affordable housing providers received direct loans from the U.S. Department of Housing and Urban Development’s Section 202 program to fund affordable housing for older adults and persons with disabilities. By the early 1990s, the Section 202 Direct Loan program evolved into the Section 202 Capital Advance grant program for persons 62 years of age and older and the Section 811 Capital Advance grant program for persons with disabilities. Both programs continued to experience annual federal budgetary cuts.
As a result of the budgetary cuts, the number of new affordable housing units for seniors has not kept pace with the aging population. In fact, from 2010-2019, the program stagnated, and no new affordable, subsidized housing was built. To date, about 10 people remain on waiting lists for every one subsidized unit in the country.
“Our average affordable housing resident pays $200 per month for rent and utilities,” said United Church Homes Vice President of Housing Cheryl Wickersham. “Without the government’s rental subsidies, it would be impossible to keep an affordable housing community afloat. Even with Low-Income Housing Tax Credits, which provide much of the equity to build the project, you can’t operate at this rate. Since the early 1990s, the only new rental subsidy has been through HUD’s Section 202 and 811 programs. Both programs provided projects with Project Rental Assistance Contracts to cover the rental subsidies for residents.”
HUD resurrected the Section 202 program in 2019, no longer as a grant program, but as supplemental funding to other financing and to provide rental subsidies. While nearly $50 million was made available in 2019, the application process is highly competitive. At least another $50 million is expected to be released in 2020.
The Right Partner Can Help Your Affordable Housing Community Continue to Serve Older Adults in Need
United Church Homes Management has vast knowledge of HUD initiatives, as well as the funding application process. This experience is critical as affordable housing communities must continually find ways to access funding and stretch dollars to help the aging population.
“Affordable housing providers must be creative with their funding,” said Wickersham. “It can’t be done with just a mortgage or tax credits, and due to the vast need, it’s become very competitive. You need to tap into local community development block grant money, Federal Home Loan Bank grants and loans, and even your organization’s own fundraising efforts. As a leading provider of affordable housing for older adults, our team continues to advocate to Congress for more funding for senior housing.”
By partnering with an organization like UCHM, you’ll have the expertise of a seasoned management team to support your community’s onsite staff and be able to leverage the vast experience of a national provider for your community.
Can Your Housing Community Compete?
With the senior living industry growing at an unprecedented rate, we identify and address challenges so you can effectively compete in a rapidly changing housing market. United Church Homes Management manages a number of affordable housing communities across 13 states and two Native American nations. With more than 100 years of experience in senior living management, we’re skilled at improving financial stability, achieving occupancy goals and helping your affordable housing community to remain sustainable well into the future.
We can help you:
- Identify new areas for efficiency
- Maintain regulatory compliance
- Increase capacity
- Improve profitability and marketability
- Enhance the lives of your residents
If you’re struggling to compete in today’s affordable housing market, take the first step by contacting United Church Homes Management today for a free consultation.