According to the 2017 American Housing Survey, 37% of renter households consist of single persons while 32% are families with children. While it is true that the US renter population mainly comprises young professionals and families, property owners may be overlooking an increasingly important demographic: seniors.
Elderly adults have been regarded as the country’s next generation of renters, brought about by economic conditions such as higher life expectancies and a decline in birth rates.
Thanks to accessible health care, better nutrition, and less physical labor, life expectancy rates in the US and all over the globe have improved substantially. Since the early 2000s, life expectancy in the country has consistently increased and remained around 77-78 years old.
A study conducted by the Statista Research Department shows an upward trend in the number of senior citizens. By 2050, it’s expected that 22% of the US population will consist of seniors above 65.
On average, an American can retire once they hit 66. Despite what the name implies, retirement serves as a new beginning for many elderly adults. This generation’s seniors have shown that they cherish their independence and prefer to age in a home rather than an assisted living facility. In a FreddieMac survey, 63% of older Americans over the age of 55 even said that they were interested in relocating at least once more.
Share of old age population (65 years and older) in the total U.S. population from 1950 to 2050
The sheer number of older adults emerging from the baby boomer generation raises the question of whether or not existing housing options will be sufficient to meet their needs. This signifies a new opportunity for property owners to answer the demand for more senior-friendly homes. In this article, we explore the factors that make seniors a source of qualified renters.
Who is The ‘Active Adult’?
When planning to engage with the senior market, you might find the term “senior housing” being used interchangeably. Hence, before making any drastic investment decisions, it’s best to have an in-depth understanding of what falls under senior housing.
Elderly adults require varying levels of assistance and medical care, depending on existing illnesses or conditions. Senior housing can be classified according to how much help they need to maintain a well-rounded life.
In recent years, a new type of senior housing emerged for the “Active Adult,” or residents who have recently retired but are still agile and quick on their feet. Despite being well over 55 years old, active adults are interested in renting single-family homes, condo-style housing, apartments, and townhouses to maintain their independence.
There are no on-site nurses or medical staff required in active adult communities, unlike in typical nursing homes and assisted living facilities. Maintenance and upkeep of these homes are also minimal, as most active adults can perform everyday duties with ease.
It’s no surprise that in the recent US Seniors Housing & Care Investor Survey 2021, the Active Adult product type emerged at the top of the investor opportunity list. The survey found that these properties exhibit a higher chance of return on investment than other senior living options.
To help you understand and make the right decision for your rental property, here is the distinction between age-targeted and age-restricted active adult housing communities.
The Fair Housing Act (FHA) prevents discrimination against renters and homebuyers based on their national origin, race or color, sex, familial status, and handicap. However, exemptions have been put into place to help address the lack of senior-friendly housing options.
Age-restricted active adult communities are exclusively occupied by residents who are 55 years old and older, under the Housing for Older Persons Act (HOPA). This means that developers of age-restricted facilities are allowed to refuse prospective renters if they consist of families with minors.
To qualify for HOPA exemptions, at least 80% of residences in a community must be occupied by adults over the age of 55.
Alternatively, age-targeted active adult communities are simply marketed towards older adults. Homes within these communities may feature amenities that can help a senior renter. In contrast to age-restricted living arrangements, age-targeted active adult communities can be occupied by families and residents of different ages. If you want to fill vacancies with more senior renters, setting up age-targeted properties gives you the flexibility you need without committing any FHA violations.
Why Seniors Are Renting
According to the Harvard Joint Center for Housing Studies, elderly adults take up as much as 30% of all renter households. But why do more than 13.2 million seniors prefer to rent rather than own a home? Here are a few reasons.
Mounting Financial Burden
Looking at homeownership as a pinnacle of success, nine out of ten millennial renters want to eventually purchase a home. However, this is not the case for most elderly adults who may not be keen on financial obligations.
The financial costs of owning a home may be compounded due to a decrease in earnings in the retirement age. The Urban Institute estimates that 14% of seniors are living in poverty. This figure suggests that for some elderly adults, homeownership may be a source of financial distress.
According to the Pension Rights Center, more than half of older adults above 65 earned less than $27,398 annually. Social Security benefits tend to be a senior’s primary source of income, with 9 out of 10 seniors receiving these benefits.
With these limited resources, an elderly adult may struggle to comply with payments such as:
- Mortgage: A mortgage may be impractical for seniors who are only living off Social Security benefits. In fact, a study found that 42% of seniors in the US continue to struggle with mortgage debt, even after retirement.
- Property Taxes: Property taxes apply to anyone who possesses a home under their name. In 2020, it was found that homeowners who occupied single-family homes paid an average property tax amounting to $3,719.
On top of these non-negotiable expenses, routine maintenance and damage repair for a home also come with a price. According to Thumbtack’s 2021 Home Care Price Index, it is estimated that a homeowner spends around $4,886 on projects like HVAC repairs, gutter cleaning, and other home maintenance projects. Given the financial burdens of homeownership, renting may be the most cost-efficient solution for seniors.
One inevitable event that most elderly parents have to deal with is eventually saying goodbye to their children. With more than enough space on their hands, many empty-nesters decide to sell their home to take advantage of its equity.
In 2017, the National Association of Realtors was able to track that 12% of elderly adults who were house hunting were looking for a smaller home. Downsizing from a larger space to a cozy apartment or townhouse allows seniors to invest more money in travel and other hobbies. Finding other things to spend their time on helps combat the loneliness of no longer having their kids around the house.
An older adult may choose to rent a smaller place such as a single-story apartment or townhouse so that they no longer have to navigate wider spaces or climb so many steps. By renting a smaller home to downsize their space, seniors can lessen the chance of life-threatening injuries and falls.
Why You Should Rent to Seniors
From 2004 to 2019, elderly adults above 55 were responsible for two-thirds of rental housing growth. Recognizing this as an opportunity to rent out to the senior market can help you make the most out of your rental properties. Expanding your renter base can lead to consistent rental income and help you save enough funds to grow your portfolio.
Only minimal modifications will be needed to upgrade existing rentals to become senior-friendly homes, as long as you’re narrowing down your market to active senior adults. In addition to filling up vacancies, accommodating senior renters can result in better-performing investment properties for various reasons.
Less Wear-and-Tear on Properties
Once you have a senior renter on your property, you can expect fewer damages in and around the home. As the retirement lifestyle demands a slower pace of life, rental properties occupied by senior residents suffer from less wear-and-tear than homes containing multiple family members. With fewer repairs to account for, properties being rented by seniors stay in the best condition for longer.
Consistent Demand for Senior-friendly Rentals
Research conducted by the Urban Institute suggests that a decline in the senior homeownership rate will result in more older adult renters in the future. By 2040, the data projects that there will be a total of 12.9 million senior renter households. This increase is a promising sign that there will be a consistent demand for senior-friendly rentals as more adults approach the retirement age.
Renting Rate for Senior Household, By Race Ethnicity, 2020 – 2040
Low Vacancy Rates
A report from the National Investment Center for Seniors Housing and Care indicated a notable drop in senior housing occupancy rates in 2020. However, a 1.4% increase in senior housing rents signified that more elderly residents found renting a more suitable living arrangement.
Once elderly renters settle on a home that is accessible and improves the overall quality of their golden years, they will be more inclined to extend their tenancy. This is why it’s essential to employ the necessary preventive measures to keep them safe as they age in your rental home.
How You Can Make Homes Senior-friendly
The key to attracting older adults to your rentals? Accessibility. According to the World Health Organization (WHO), 20-30% of elderly adults who suffer from falls are at higher risk of hip fractures, head trauma, bruises, and other injuries. This means that if you’re set on making your rental investment more senior-friendly, it’s wise to prioritize safety above anything else.
The last thing a resident would want is to feel restricted in their own home, which is why certain modifications will have to be made to homes occupied by senior renters. However, making a rental property safer for elderly adults doesn’t have to involve a costly home renovation project. In fact, there are simple ways to make your rental more accessible for all ages.
Let the Light In
Three-way switches can help renters turn on lights from different locations in a home. Providing multiple switches can prevent accidents caused by poorly lit rooms and hallways. It may also be a good idea to add more light sources in high-risk areas, like bathrooms and stairwells.
Even Out the Landscape
To help minimize the risk of falls and injuries, you should ensure that all areas of the floor are even and slip-resistant. Consequently, you can also make carpeted areas and stairwells safer by repairing any uneven areas.
Replace Doorknobs and Handles
Most doors are fitted with traditional round doorknobs. Switching these out with door handles or levers can make it easier for a senior resident to find their grip. Replacing door pulls on cabinets with wider D-shaped handles makes day-to-day tasks such as cooking or cleaning much more manageable.
If you’re currently managing rentals occupied by seniors, timely responses for maintenance requests are imperative to keeping them safe and happy. This is when working with a property manager might come in handy.
Some property managers, such as Poplar Homes, offers 24/7 maintenance support for you and your renters. With the help of our tech-enabled property management services, maintenance requests are resolved promptly by our reputable support team and vetoed third-party contractors.
Ultimately, the senior rental market poses a golden opportunity for growing your rental business. Existing properties can be easily made senior-friendly with slight modifications, and the number of seniors looking to rent is only expected to increase in time.
Renting out to elderly adults can also be a rewarding experience since they take better care of your property and stay there for a long time. By addressing the lack of senior-friendly homes, you’re helping out senior residents make the most of their golden years.
Prioritizing safety and accessibility tells senior renters that your rental is an ideal space to live in. Taking the necessary precautions to keep your renters safe, regardless of their age, also makes your investment a cut above the rest.