How Residential Real Estate Investors Can Help Solve the Impending Silver Tsunami Crisis | Think Realty | A Real Estate of Mind
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How Residential Real Estate Investors Can Help Solve the Impending Silver Tsunami Crisis

As the baby boomer generation continues to age, an unprecedented population shift called the Silver Tsunami is coming -- and its tidal waves will hit America hard. Here’s how residential real estate investors can help the nation prepare.

With nearly 10,000 Americans turning 65 every single day, our country is rapidly aging. By 2030, all of the nation’s baby boomers – roughly 20% of the American population – will be older than 65. This will expand the size of the country’s elderly population to a staggering 72.8 million people, with the oldest among them 85 years old.

But America is not prepared for this population shift, and a crisis is looming. Around 70% of baby boomers will require some form of long-term care services after age 65, and most will be unable to afford it. One federal study predicts that today’s seniors will incur an average of $138,000 in long-term care bills — expenses that are not covered by Medicare as many assume. Only 7.2 million Americans (roughly 10%) have long-term care insurance policies that could potentially cover the costs of their care.

This leaves the overwhelming majority of seniors with very few options for how to pay for long-term care: they must be rich enough to pay out of pocket, poor enough to qualify for Medicaid, or rely on family and/or volunteer caregivers. In most cases, seniors will need to pursue all three of these options. The baby boomer generation must prepare now for four “aging shocks”: the uncovered costs of prescription drugs, the costs of medical care not covered by Medicare or private insurance, the costs of private insurance that only partially fills in the gaps left by Medicare, and the uncovered costs of long-term care. The prognosis becomes even more grim with each passing year, as the already astronomical costs of long-term care continue to skyrocket.

But how exactly is this impending disaster tied to residential real estate investment? Much more closely than many realize. As the population ages and the demand for long-term care reaches a fever pitch, residential real estate investors are posed to provide an invaluable resource to seniors and their families, helping them to not only access care sooner, but also cover some of the costs of care.

Here’s why: The baby boomer demographic holds nearly 80% of the total housing wealth in the United States, with an estimated 60-75% of their assets held in real estate. The tidal waves from the Silver Tsunami will hit housing markets hard as millions of baby boomers transition out of their homes and into assisted living communities in the years ahead.  Baby boomers are set to leave their homes in record numbers, freeing inventory in what has been an increasingly tight housing market. This housing will provide a substantial boost to supply: within the next decade, more than a quarter of currently owner-occupied homes will become available. In traditional retirement communities throughout places like Florida and Arizona, that number could reach nearly two-thirds.

With so few financial options available and the costs of care looming, selling the home is often the first thing that seniors and their adult children will consider to free up funding.

For many people, selling a home involves several months of stress followed by relief when it’s finally over. But for seniors, the experience of selling a home is far different – and generally more stressful – due to a number of complicating factors. Seniors often need to transition into assisted living communities after experiencing a life-changing medical crisis. It may be necessary to sell the home to be able to transition the senior to a care community immediately due to their changing needs.

An uptick in supply is clearly a positive thing for buyers – for sellers, not as much. Residential real estate investors can help boomers to sell their homes quickly in order to access the care they need as soon as possible, sparing their families from the hassle of listing the home on the market.

As the Silver Tsunami begins to impact housing markets in unprecedented ways, residential real estate investors would be wise to keep this on their radars: we are in a unique position to both help ease a crisis while expanding our own businesses.

 

Ben Rao is an author, serial entrepreneur, business coach and real estate investor with nearly 20 years of experience in technology and real estate investment. He is a partner in multiple national companies within the senior industry and the author of Paying For Long-Term Care: The Essential Guide to Understanding and Funding Senior Care. Ben is also the co-founder of Mom’s House, an innovative residential real estate investment platform that assists real estate investors in closing deals.