The segment of the multifamily market occupied by Americans age 55 or older is growing. (55 is used as a cutoff based on the laws governing age-restricted housing.) There were an estimated 41.8 million households headed by someone age 55 or older in 2005, accounting for 36.8% of all U.S. households. Those figures are expected to increase to 53.2 million and 41.7%, respectively, by the year 2014. At that rate, the share of U.S. households age 55 or older will pass the 40% mark for the first time in 2012. ¹

Over a period of years, NAHB economists have worked with HUD and the Census Bureau to improve the quality of the data on senior housing markets. One result of these efforts is that, beginning in 2001, the AHS ² began asking respondents whether the building or neighborhood they live in is age-restricted and, if not, whether it is nonetheless occupied mostly by people age 55 or older. Using the new information, along with structure type and ownership status, we can distinguish the independent living units and look at the details of this part of the market.

See Table 1 notes, below.

For purposes of this article, we classify housing units as independent living if they are multifamily units providing additional services such as housekeeping and financial management, or age-restricted rental units. Defined this way, independent living units accounted for 1.4 million out of the 9.2 million 55+ multifamily households (Table 1) in 2005, the most recent year for which detailed information is available.

In terms of percentage, independent living units account for about 15% of the 55+ multifamily households (Figure 1).

Features of the Units

Compared to multifamily units occupied by senior households in general, a much larger share of independent living units contain less than 750 square feet (Figure 2). Multifamily units in general have an average size of 1,318 square feet. However, on average, an independent living unit only has 793 square feet.

For all multifamily units headed by older people in general, two bedrooms are most common (Figure 3). In contrast, in a larger share of the independent living units there is one bedroom or less than one bedroom.

As far as the number of bathrooms is concerned, we see that more than 80% of independent living units have one or less than one bathroom (Figure 4). Hence, one bedroom and one bathroom are more typical for independent living units.

The average size, number of bedrooms, and number of bathrooms in independent living units are all rather modest, and suggest that many of them are in affordable housing projects that benefit from government subsidies. At present, the most important subsidy for building affordable rental housing is the Low-Income Housing Tax Credit (LIHTC) program. According to statistics compiled by the National Council of State Housing Agencies, states, on average, allocated 23% of their LIHTCs to housing for the elderly (not including assisted living or housing for the disabled) in 2003—although the share was highly variable and as high as 100% in Hawaii. A variety of other government subsidies are available, but these are frequently combined with LIHTCs to build affordable housing for the elderly, so the LIHTC tends to play a dominant role. (Common examples of other subsidies include tax-exempt bond financing and the HOME Investment Partnerships program.)

The presence of elevators also can be used to distinguish independent living from other multifamily units. Except for some older buildings, all residential structures of four or more stories in height have elevators. So it’s most useful to look at elevators in two- or three-story buildings (Figure 5). A full third of the residents in two- and three-story independent living units are in buildings with elevators, compared to only 7% of two- and three-story multifamily buildings occupied by senior households in general.

Some features, such as separate dining rooms, usable fireplaces and laundry rooms, are less common in independent living housing than general senior multifamily units (Table 2). This is consistent with the relatively small size of independent living units.

The AHS also contains relatively new questions on recreational and community services provided in apartment buildings. Recreational facilities include any of the following: a community center or clubhouse, golf course, walking/jogging trails, private or restricted-access beach, park or shoreline. Clearly, it would be useful to identify individual recreational features, such as private-access beaches or golf courses that are significantly different from a community center. However, the Census Bureau combines all recreational amenities into one category on the publicly-accessible AHS data file, to preserve respondent confidentiality. Community services, which include shuttle buses and day care, are mostly common in independent living units (52.2%). In comparison, only 26.7% of all 55+ multifamily units have these services.

Moving, and Choosing Where to Go

Why do seniors move, or choose their desired location? The AHS provides information on why the senior households who moved recently chose to move at this time, and why they chose a particular apartment building to move into. In order to know more about these reasons, we need to restrict the sample to recent movers only. We generated Table 3 and Table 4 using a sample limited to senior households who moved since the previous round of surveys (about two years ago). We included households who moved in the previous two years, instead of only one year, to produce a sample that is large enough for the subsequent tabulation.

As shown in Table 3, less expensive housing often is more important to those who moved into independent living units, while quality is secondarily important. This is consistent with the small size of most independent living units, and the hypothesis that many of them are subsidized.

As shown in Table 4, compared to the households moving into 55+ multifamily units in general, those moving into independent living units are less often motivated by the design of the community or the housing units themselves, but more often motivated by a desire for convenient public transportation and other public services. For more discussion on 55+ multifamily movers, see the NAHB online publication: the Profile of the 50+ Housing Market-Chapter 5.³

Although the AHS provides rather detailed information on reasons for moving, the list of possible reasons is not comprehensive, and a large share of households reported that they moved into apartment buildings for “other reasons”. To investigate specific reasons for moving that were not mentioned in the AHS, we use a survey by the National Association of Home Builders (NAHB) and the American Association of Retired Persons (AARP). In 2003, NAHB and AARP undertook a collaborative effort to study the housing preferences of people older than age 50, and how builders are serving this segment of the housing market. Consumers were asked to report whether access to particular neighborhood features is important to them in their later years, and whether they currently have these features. Table 5 summarizes these answers. Safe neighborhoods, a hospital, and doctors’ offices are at the top of the list, reported as being important by at least 90% of 50+ households.

Comparing the survey responses shows differences between what consumers said they consider important, and what is currently available. Such differences, or gaps, reveal the disconnection between what consumers desire and what the senior multifamily housing market supplies. There is a gap of at least 20 percentage points between these percentages and the share of 50+ households reporting that they actually have these health-related facilities in their neighborhoods (Figure 6).

The gap is almost as large for grocery stores. This suggests that it is a good idea to locate independent living properties near shopping and healthcare facilities, which are important to the older residents in multifamily units.

            ^{1 According to the Profile of the 50+ Housing Market: http://www.nahb.org/generic.aspx?sectionID=826&genericContentID=54480.}

            ^{2 The American Housing Survey (AHS), a nationally representative survey and provides information on both housing units and their occupants. The AHS is conducted by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD).}

Table 1 Notes:

     1. “Independent Living” units are either multifamily units providing “assisted” services (meals, transportation, housekeeping, and financial management) or age-restricted rental units. “Assisted Living” units are units that provide personal services (bathing, eating, moving about, dressing, toilet use). “Other 55+ Rental Apartments” include renters who had mostly 55+ neighbors, but the neighborhoods are not explicitly age-restricted. “Age Restricted Condos” include owners in age-restricted neighborhoods. “Other 55+ Condos” are identified by condo owners who reported their neighbors are mostly 55 and older, although the neighborhoods are not explicitly age-restricted. “Other 55+ Multifamily Units” includes the 55+ multifamily households who live in ordinary neighborhoods that are neither age-qualified nor occupied mostly by people over age 55.
     2. This classification scheme was devised to handle the new AHS data and doesn’t necessarily reflect schemes used elsewhere. It seems unlikely that independent living and assisted living units are actually owner occupied. However, there are two interrelated reasons ownership status may occasionally be specified inaccurately in the AHS. First, the respondents must choose between identifying themselves as owners or renters, and units intended for seniors sometimes involve up-front fees and rather complicated financial contracts that may tend to obscure the owner/renter distinction in the mind of some respondents. Second, some older respondents may have trouble correctly interpreting certain questions. The numbers of units in apparently anomalous cells in the table are small enough that they do not appreciably impact the percentages reported in subsequent tables.

            ³ According to the Profile of the 50+ Housing Market: http://www.nahb.org/generic.aspx?sectionID=826&genericContentID=54480. [ return to top ]