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What Is Aging in Place?

Homeowners 75-plus who aren't maintaining their abode, can't safely go outside alone, and flat-out refuse to move -- welcome to the aging in place epidemic.

[Updated: Feb 04, 2021] Feb 02, 2021 by Lena Katz
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The current socio-cultural trend of "aging in place" is not entirely unique to the United States, but it's common to an extreme here that's becoming problematic for both seniors and younger generations. Yet in some ways, the aging population and younger ones alike feel they have no choice. Addressing the problem may call for a paradigm shift away from fierce individualism and independence and more toward the extended-family support systems of other cultures.

What is aging in place?

Aging in place is when people stay in the homes they lived when they were raising children, long after their children have moved away, and continue to fend for themselves rather than downsizing or moving to a senior community. If these seniors own their home (which they often do), they may take out a reverse mortgage or a HELOC to pay for expenses they can't afford on their pension or other retirement income. Unfortunately, this can be a downward spiral where the older person's changing needs become greater and more expensive, while they become less and less able to take care of their property.

From a purely psychological perspective though, it makes sense why many elderly would age in place. They don't want to give up their familiar life and established social connection and routines, in the space they've occupied for decades. They may be fearful of skilled nursing facilities. They may not be welcome to move in with their children. They may simply be mentally unequipped to deal with a massive life change and/or have nobody really helping to facilitate their changing needs or support them after a transition.

As a result, households over the age of 65 are the fastest-increasing age group, accounting for 26% of all households, according to Harvard University's Joint Center for Housing Studies. And more than 78% of these are homeowners. The high number of older homeowners, age 65 or even 80 and above, is pinpointed as one of the key reasons millennials are having trouble buying: The inventory simply isn't available.

Problems from a real estate investor standpoint

For investors who want to fix and flip or buy, rehab, and rent, homeowners who age in place create a landscape of missed opportunities you can actually see when driving through a neighborhood: A home with good structure and desirable vintage architecture, but it's gone decades without a new paint job or roof because the octogenarian owners don't trust contractors. Or you'll see a single-family home sitting on a double lot -- surrounded by dirt and weeds that the elderly owners have no interest in landscaping. Or, you may ride by a home that barely has a resident, because the owner spends time in and out of hospitals and rehab facilities but refuses to move to an assisted living community permanently.

What's an investor or real estate agent to do? You can send mailers offering to buy the property, possibly even make a call, or show up on the doorstep if you're feeling really motivated. But if the owners aren't ready to sell, there's nothing you can do when individuals decide to age in place. So instead, look at other ways of investing. Here are some ways of monetizing the solutions to aging in place.

Look for homes that can be expanded to be multifamily

When looking for properties to rehab and rent or flip, don't just renovate them to look nicer. You also should figure out ways to increase the living space to appeal to multigenerational families.

Can you easily add a studio or other accessory dwelling unit by converting a sunroom or garage? Can you add a second bathroom to a three-bedroom, one-bath listing? Instead of putting in a pool, can you build a two-bedroom casita? Bear in mind: There are buyers who are looking for luxury touches, but in this post-pandemic time, there are a lot of others who just want more bedrooms and bathrooms for their families.

If you become a specialist in multigenerational homes, you might actually start to get first dibs on homes before they go on the market, since people who are moving in their aging relatives might trust you to sell the place they're moving out of.

Residential care facilities

If you want to directly invest in property, consider the option of residential care facilities. For many people who have aged beyond being able to live independently, this setting is far preferable to nursing homes. Care homes with only four to six residents can be housed in regular single-family homes (albeit with certain modifications).

If you're considering opening one of these facilities, try to prioritize comfort and quality of life over capacity. A residential care facility that feels like a bed and breakfast with 24/7 supervision can charge thousands more per person per month than one that feels like a low-budget boarding house.

Assisted living facilities

When it comes to the point where an older person can no longer manage their ADLs (activities of daily living), their family members or even their doctor may point them toward assisted living, where caregivers are available to help them shower, dine, and do household chores.

While the senior living industry likely will undergo major reforms in the wake of COVID-19, it's important to note that an assisted living community is not the same as a nursing home. Residents need much less care, and many move in because they simply get tired of being alone and vulnerable. So, while this investment space should be approached with caution for the next couple years, the number of potential customers will continue to grow exponentially -- and you can invest either as an owner-operator or a landlord renting out a multifamily building or via REITs, or real estate investment trusts. Perhaps you can be the innovator who creates a better product.

The long view

Aging in place is a true conundrum of modern American society. It is what happens when a "me first" mindset spans generations -- the elder generation hangs on to their property beyond when it's manageable for them, and the younger goes without. There's no easy fix, but there is a lot of opportunity -- not just to make money, but to be part of a solution.

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