As developers build high-end senior housing, aging middle-income residents are asking, ‘Where can we live?’

The path to Rich and Elaine Caputo’s front door in Torresdale includes 10 stairs — something that didn’t feel like much of an obstacle when they purchased the house in 1973.

At the time, the pair were in their 20s, with two children in tow. The new 1,400-square-foot rowhouse in Philadelphia’s Northeast seemed pretty perfect — just a short drive to Elaine’s sister and Rich’s best friend. So, that summer, they put down a $25 deposit and settled into their $29,900 home.

These days, however, their three-story house isn’t as ideal as it was when they raised four daughters — or helped raise 12 grandchildren. The 14 stairs to the second-floor bedroom have become harder to surmount. Same with the 11 steps to the basement. And with a growing number of health problems, emergency procedures, and joint replacements, Rich and Elaine want to move to a home where they can age safely and more comfortably.

Yet they can’t find one.

Rich, now 73, and Elaine, 72, are on the oldest edge of the baby boomer population, a group of nearly 75 million aging U.S. residents. By 2030, all baby boomers will be older than 65, the Census Bureau estimates, meaning that one in five of all U.S. residents will be retirement age. Already, roughly 10,000 baby boomers retire every day. By 2035, people 65 years and older are expected to outnumber children for the first time in U.S. history.

All of which means: Over the next two decades, the number of households with residents in their 70s, 80s, and 90s is expected to soar.

Those statistics have begun to worry real estate market observers, who are waiting for senior-housing demand to kick into high gear. Many in the industry have long anticipated a rush of seniors needing housing — only to find that people in their 60s and 70s want to age in their own homes. Baby boomers are generally considered to be more active than previous generations and tend to live close to family. Even more, three in four boomers, a U.K. study found, expect their children to help care for them as they age.

These boomer trends have presented a problem for developers, many of whom built independent living, assisted-living facilities, or continuing care retirement communities (CCRCs), which usually offer higher-end amenities, services, and a community for fees that tend to be thousands of dollars per month.

But as studies suggest that anywhere between 60 and 77 percent of seniors want to age in place, and as the average age of seniors in assisted-living hovers around 87, 2009 data show, developers are finding that the rooms they thought would fill quickly are sitting empty. In the fourth quarter of 2018, for example, the national occupancy rate for independent-living and assisted-living facilities fell to 88 percent, a seven-year low, said Beth Burnham Mace, chief economist at the National Investment Center for the Seniors Housing & Care Industry (NIC).

The mismatch between the current senior-housing supply and the desires of an aging population has left people like the Caputos stuck, wondering what their next move will be.

“I don’t want to consider myself old,” Rich said, as he and Elaine recounted days of dancing and traveling on family vacations. Both retired years ago — Rich, from an ad sales job at the Inquirer and Elaine from Hahnemann University Hospital, where she worked as a medical technician.

Yet the realities of aging are setting in — and the Caputos, despite feeling “young at heart," are no longer as mobile. Rich has had two hip replacements, two heart attacks, and lower back pain. Elaine has had a knee replacement, a torn rotator cuff, and heart problems. They briefly installed a chair lift to get to the second floor, but ultimately they want a one-story home.

Yet like many people their age, they can’t find one they can afford.

The Caputos consider themselves “middle-income," drawing each month from Social Security, Rich’s pension, and disability benefits from the Department of Veterans Affairs for his Vietnam War service. They make too much to qualify for subsidized affordable housing for low-income seniors but not enough to pay the high monthly fees required by some 55-plus developments and continuing-care retirement communities. One active-adult community built by Pulte in Bucks County, for example, currently has homes for sale for more than $700,000.

A study by Plante Moran Living Forward, a senior living consulting firm, and Senior Housing News found, based on NIC data, that the national average monthly rent for an independent living facility in the first quarter of 2016 was $2,971. The average assisted living rent was $4,365 during the same time.

“A lot of the development has been toward the higher-income cohort, so the gap that you’re seeing is because there may not be sufficient housing being built to cover middle-income seniors,” said Mace, NIC’s chief economist. Part of the reason, she added, is that labor expenses at assisted-living and independent-living communities tend to account for nearly 60 percent of a facility’s budget. Simply put, building a higher-end community, where rents or entrance fees can be more expensive, helps cover operational costs.

Still, if the industry continues to overlook middle-income seniors, Mace said, “it’s a problem that’s going to be explosive.”

“We know that this middle-income group is big and growing right now,” Mace said. “We know that they don’t have the incomes to afford today’s senior housing product. ... So the opportunity from an investor’s point of view is significant. But we have to figure out what the right product is for that cohort.”

At a briefing later this month in Washington, D.C., NIC researchers plan to unveil an in-depth report about the middle market of aging Americans. According to Mace, tackling the growing problem will require more than just public policy or private investment.

In the meantime, people like the Caputos are continuing to weigh their options. Rich and Elaine feel far too “fun and jovial" for assisted living, they joke, but know that time is ticking down in their Torresdale home.

Their first choice would be to buy a home without significant maintenance — preferably not in a retirement community — for between $200,000 and $300,000, where they can finish out their lives. But in Philadelphia and some of its suburbs, where housing is dense and older, finding their next home could be even more challenging than elsewhere.

“I don’t need a five-bedroom house anymore; I don’t need a four-bedroom house,” Rich said. “To me, there’s not enough affordable housing for the baby boomers.”