I toured a naturally occurring retirement community (NORC) in Queens, New York a few years ago. It was an Aging in Place initiative, partly funded by the Denver-based Daniels Fund. Fun fact: The fund was established by Bill Daniels before he died. His fortune came from basically inventing cable TV.
The purpose of a NORC is to allow people in the community to age in their own homes as long as possible, rather than forced to move into assisted living. Homes in the community that I toured were small, modest houses built after World War II. The community was mostly Jewish.
The reason this community in Queens was deemed a naturally occurring retirement community was because a large percentage of the houses were owned by people who were born between 1920 and 1940. Most had lived there for 50 or 60 years and had grown old there. The Aging in Place program involved people from the community who would volunteer, or be compensated, for shoveling snow, dropping off groceries (before Instacart), delivering meals, installing home disability adaptations and volunteering to check-in on residents for wellbeing. My takeaway was the community was exceptional and benefited from more resources and community support than most similar aging communities could count on.
The New York Times recently published another take on the aging in place concept, asking ‘Aging in Place, or Stuck in Place?’.
About 80 percent of older adults live in homes they own. But the traditional notion that a house with a paid-off mortgage can serve as an A.T.M. to help fund retirement living is shifting, economists report. Homeownership no longer is an unqualified benefit for some seniors.
“Are they aging in place, or stuck in place?” asked Linna Zhu, a research economist at the Urban Institute. “Do we need to rethink this so-called American dream? It worked for previous generations, but does it still work today?”
In one anecdote the Times wrote about a couple in their early 70s with a 4-bedroom house on 2-acres. They want to downsize, but they can’t find the type of house they want. Covid drove up prices and developers are building multi-story condos. Single-story places are snapped up and prices have skyrocketed. In another anecdote a veterinarian borrowed against his home to keep his practice afloat after the 2008 recession. He now carries a $180,000 mortgage. Indeed, nearly one-third of senior homeowners in their 80s still have mortgage payments. Some senior homeowners are finding their houses more than they can afford.
Larger mortgage balances and higher interest rates — along with higher property taxes, insurance and other costs — have helped make 43 percent of older homeowners with mortgages “cost burdened,” defined as spending 30 percent or more of their income on housing and related costs.
It’s also not that easy to borrow against home equity using a reverse mortgage. There are fees involved and the paperwork is substantial. Yet, it’s an option that many seniors have.
Dr. Zhu agreed, calling a federal reverse mortgage “a very effective way to tap home equity.”
But taking a reverse mortgage or otherwise extracting home equity is something very few older homeowners actually do.
One alternative is 55-plus communities, some of which can also be overpriced. I have seen advertisements that make retirement communities sound like resorts, with resort-style pricing. Years ago, I read about one where the condos cost $300,000 or more and could not be left to heirs when you died. The $300,000 price tag was little more than rent on a place you could live as long as you were able. I don’t recall if the price covered long-term care.
Something else not mentioned in the New York Times article is that Baby Boomers have busted institutions and shifted the economy whenever they entered a new phase of life. Perhaps competition will entice developers to step in and begin to build homes and develop communities that better fit aging Boomers’ needs. Not far from where I live there is a new community of tiny homes popping up for the purpose of housing seniors who want to live independently but without the burden of large houses with lawns.