Aging Population Forces Housing to Mature

The nation's housing developments need to grow up.

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In a commentary released Friday, ""Fannie Mae"":http://www.fanniemae.com/portal/index.html SVP and chief economist Doug Duncan said the country must prepare itself to address the housing needs of the aging Baby Boomer population.

""With millions of Baby Boomers entering their golden years, attention is increasingly focused on the challenges associated with meeting the housing needs of an aging nation,"" Duncan wrote.

There are many challenges to address: Support services to allow seniors to age in place, financing residential developments ranging from independent living facilities to nursing homes, creating affordable housing for low-income and low-net-worth seniors, and enabling older homeowners to tap accumulated equity.

Fannie Mae's Economic & Strategic Research Group recently published a Data Note detailing the characteristics and housing consumption of the nation's elderly to get a clearer picture of the needs that must be addressed soon.

The study had a particular focus on the ""older elderly,"" meaning seniors 75 years or older. This population is projected to grow rapidly and has different disability and consumption patterns than younger seniors, Duncan explained.

Among all the age groups, the older elderly is the only group to have experienced rising headship (owner-householder) rates in recent decades.

The number of owner-householders per 100 people increased from 41 in 1980 to nearly 50 in 2010, a trend not seen in younger populations. Duncan attributed the increase in headship rate to the expansion of owner-occupancy.

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Rising homeownership rates have also contributed to rapid household growth among the older elderly, with the number of households with older elderly holders increasing 15 percent from 2000-2010. The number of older elderly renters also increase rapidly, going up by 17 percent in the same decade.

Baby Boomers still have a few years before joining the older elderly population, but the note found that their housing consumption is already expanding quickly.

As Boomers begin to enter the older elderly age group, housing demand growth is expected to accelerate even more rapidly.

Census Bureau population projections estimate that by the first half of the next decade, the older elderly population will grow at four times the rate of the overall population, a pace expected to hold up in coming decades.

Households headed by an older elderly person are projected to comprise half of the country's total household growth between 2020-2025.

The older elderly are twice as likely to have a disability as those aged 65-74, Duncan observed. Thus, the rapid growth of the older elderly population will have a considerable impact on housing needs.

""Given the higher incidence of disability among the older elderly, the entrance of Baby Boomers into this age category will swell the need for a variety of specialized housing and supportive services. Solutions will often need to combine health and social services with physical design features that promote independent living and help mitigate frailties associated with aging,"" he wrote.

Also, given the fact that a large majority of adults would prefer not to relocate as they age, a large part of the response to their needs will include retrofitting existing house stock with features such as ramps, wider doorways, and bathroom grab bars.

Duncan also speculated that there will be a need to include new residential development in many forms, from traditional housing with enhanced accessibility, to independent and assisted living facilities, to nursing homes.

Duncan called for more research on the housing needs of the older elderly, as well as the impact that recent trends like price declines might have on housing wealth and future home equity.

He reflected that drumming up funds might require ""creative combinations of public and private resources, including in some cases unlocking the accumulated home equity of the rapidly growing number of older homeowners.""