Baby Boomers have been at the helm of economic trends in the United States for decades. Currently holding nearly 80 percent of total housing wealth in the United States, the Baby Boomer generation is clearly steering residential real estate trends as well. In terms of assets, middle class Baby Boomers are almost completely dependent on housing, with 60-75 percent of their assets held in real estate.
But as the Baby Boomer generation reaches its golden years, major changes are on the horizon for U.S. housing markets. America’s massive Baby Boomer population—those born between 1946 and 1964—is aging at a rapid pace. Nearly 10,000 people turn 65 every day in the United States, and by 2030, 20 percent of Americans will be older than 65.
An estimated 70 percent of people over 65 will require some form of long-term care. As the Baby Boomer generation ages into retirement, some of them will age in place. Many more, however, will eventually find their homes too difficult to manage as they get older, with adult children who are physically and/or financially unable to be their caregivers. In other words, tens of millions of Baby Boomers who need long-term care over the next few years will be downsizing or moving into senior living communities.
Is this impending shift significant to us as real estate investors? The simple answer is yes, and it’s a bigger deal than you can imagine. Real estate investors can provide an invaluable service to not only the senior homeowner, but also to their families.
More often than not, seniors need to transition into assisted living communities after suffering from an unexpected medical crisis. This often happens quickly, and the family is usually never prepared for it. Suddenly, the senior’s adult children—who may be in their 50s or 60s and oftentimes live hundreds of miles away—are left to deal with an outdated house that their parents likely lived in for decades. A common scenario is that their mother is widowed and has been maintaining the house on her own for many years. Whatever the case may be, the house likely needs major maintenance and rehabbing.
In the coming years, countless families will be left to grapple with some hard truths:
- The fact that their loved one needs to move out of the family home and into a senior living community.
- The crushing costs of their loved one’s long-term care needs (average expenses range from $3,000-$15,000 monthly).
- The daunting reality of selling an outdated home filled with furniture, knick-knacks, and ‘stuff’.
This is where we come in as real estate investors. We are uniquely positioned to offer a solution that eases the burden of these truths for families. Over the next 10 years, the residential real estate industry will provide investors with the perfect opportunity to be problem solvers for millions of families who need to transition their loved ones out of their homes and into care communities as quickly as possible. For many families, a real estate investor who buys their outdated home as-is (with everything inside) becomes the one person who is able to make all the difference in getting their loved one into care. In this sense, residential real estate investors can help to alleviate an enormous amount of stress for families in this situation.
As the population ages, the demand for long-term care and the costs of providing that care will increase. With the cost of long-term care currently rising faster than the rate of inflation, research shows that over half of middle-income Americans over 75 will be unable to afford it in 10 years. As real estate investors, our value to families is multi-faceted. Oftentimes, selling the family home is a need, not a choice, when a family is faced with the expenses of their loved-one’s long-term care.
When families suddenly need to sell a loved-one’s house, they are likely going through one of the most emotionally charged and difficult times of their life. People who are concerned about a loved-one’s care and quality of life have no interest in dealing with the logistics of hiring contractors to make house repairs, cleaning the house out, finding a Realtor, and showing the home.
As residential real estate investors, we need to be recognizing the endless opportunities in front of us to not only grow our businesses, but also to provide a service that helps families when they need it the most.
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