Beyond 55+: What Happens When More of Us Live Healthier Lives to Age 100?
Fifteen years can seem like a long time from now.
That’s a lot of monthly sales per community to log in, many quarterly reports, and for many builders whose entire business viability can occasionally hang in the balance of closing on two or three home sales this weekend.
Still, 15 years can go quickly in residential real estate and construction calendar time. It’s like a flash.
And in just 15 years or so, American households will cross a threshhold builders have hardly begun to even think about, that will matter a great deal to their business models.
In less than two decades, the graying of America will be inescapable: Older adults are projected to outnumber kids for the first time in U.S. history.
Already, the middle-aged outnumber children, but the country will reach a new milestone in 2035. That year, the U.S. Census Bureau projects [PDF] that older adults will edge out children in population size: People age 65 and over are expected to number 78.0 million, while children under age 18 will number 76.7 million.
It’s no wonder, then, that sentiment among builders and developers who target 55+ home and community buyers remains a pocket of positive expectations, even as other areas of move-up and second-time move-up new home activity weaken.
The latest quarter reading on home builder and multifamily market mood for the 55+ segment regained momentum based on activity and demand builders and developers are seeing in their marketplaces.
The National Association of Home Builders’ 55+ single-family housing market index rose 6 points to 66 in the fourth quarter of 2018, returning to levels seen in the first half of the year (Figure 1). A reading at or above 50 indicates that more builders view conditions as good than poor.
A positive outlook is one thing. Readiness for what’s coming is another.
An area many home builders have only begun to address is that all 55+ households are not the same, and there are opportunities across the continuum of wealth and income, geographies, community types (age-targeted, age-restricted, mixed age, etc), intentional communities, lifestyle communities, resort communities, and ones where living on fixed income is affordable.
Still, in the next 15 years, a real wake-up call will need to take place, as the moment, in 2035, where 65-plus year-olds will outnumber kids.
A whole other customer segment category–somewhere between 55+ and senior housing–will need to evolve to accommodate the multiple lifestages people may experience in that 40-year stretch from 55 to 95.
The notion of aging in place, almost every expert would say, is only a crude start to the kind of development, design, engineering, technology, floorplanning, etc. that will need to occur as a relatively healthy horde of people pursue housing options and alternatives.
Some companies and industry sectors are investing now in transformative business models, opportunities, and risks associated with none other than a new surge of 100-year-old Americans.
The impact of what’s known as the “longevity economy” — defined as the purchasing power of those 55 and older — is over $7.6 trillion in the United States alone. Many business leaders are recognizing that there are, and will continue to be, financial reasons to pay attention to these demographic shifts.
There is a difference, however, between simply identifying opportunities for new products or services for an older market and actually making the longevity economy part of a business strategy. How do you go from product opportunity to a change in business strategy? Through our work at the Stanford Center on Longevity, we’ve had the opportunity to work with and study companies that are doing that.
One of the bigger implications we see, as we’ve noted here before, is a shift in focus among classic home building firms, from building and sales, to service and customer experience business platforms that blend unit design and structure with community, and blend living in the home with access to health and medical, entertainment and recreational, social and cultural resources for the well-being of residents.
Some few builders may be investing time and attention–well beyond the scope of 55+ community and product development–to what consumers want and are willing to pay for in homes for people who are 70, 80, even 90, and able to live independently. Those investments–in what people desire and are willing to pay for–often become investments well-placed for what comes later, mainstream demand among people who say they need solutions previously available to only a privileged few.
This is an opportunity area.