Is Senior Housing Affordable?

When we talk about affordable housing, the conversation usually centers on two groups of people. We talk about low-income families struggling to pay the rent, and young adults who cannot afford to purchase their first home. But there's another demographic that rarely receives the same attention. It's a demographic that's growing rapidly, and one where the affordability challenge becomes more complicated with each passing year. I'm talking about seniors. We are owners and developers of senior housing, including assisted living and memory care facilities. One of our facilities charges approximately $8,000 per resident per month. Clearly, at that price point, we're not talking about affordable housing in the conventional sense. But here's something important that often gets lost in the discussion about senior housing affordability. The building itself is not the primary reason the monthly fee is $8,000. The lion's share of that expense is the cost of providing services. We're talking about around-the-clock staffing, personal assistance, meals, housekeeping, supervision, medication management, and specialized memory care. These are not optional luxury amenities. They're essential components of the product being delivered. When someone says senior housing is unaffordable, they're often combining multiple fundamentally different things: the cost of housing, the cost of food and the cost of care. Because affordable senior housing is only part of the equation. What we're really confronting is the affordability of aging itself. ------------ **Real Estate Espresso Podcast:** Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1) iTunes: [The Real Estate Espresso Podcast](https://podcasts.apple.com/ca/podcast/the-real-estate-espresso-podcast/id1340482613) Website: [www.victorjm.com http://www.victorjm.com/](http://www.victorjm.com http://www.victorjm.com/) LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce) YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734) Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso) http://www.facebook.com/realestateespresso%5D(http://www.facebook.com/realestateespresso) Email: [[email protected] mailto:[email protected]](mailto:[email protected] mailto:[email protected]) **Y Street Capital:** Website: [www.ystreetcapital.com http://www.ystreetcapital.com/](http://www.ystreetcapital.com http://www.ystreetcapital.com/) Facebook: [www.facebook.com/YStreetCapital](https://www.facebook.com/YStreetCapital) http://www.facebook.com/YStreetCapital%5D(https://www.facebook.com/YStreetCapital) Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)

• 0:02Speaker 00

  Welcome to the Real Estate Espresso Podcast, your morning shot of what's new in the world of real estate investing. I'm your host Victor Manash. On today's show, we're talking about affordable housing, but when we talk about affordable housing, the conversation usually centers on two groups of people. We often hear about low-income families, struggling to pay rent, and young adults who can't afford to purchase their first home. But there's another demographic that is not getting quite the same attention. It's a demographic that's growing rapidly and one where the affordability challenge becomes more complicated with each passing year. I'm talking, of course, about seniors. In my company, we're owners and developers of senior housing, including assisted living and memory care. In fact, one of our facilities won the Senior Housing News Architectural Design Award on a nationwide

• 0:45Speaker 00

  basis in the US back in 2021 from a memory care facility that we built in Louisiana. That facility today is full and charging about $8,000 a bed per month. Clearly, at that price point, we're not talking about affordable housing in the conventional sense. But there's something important that often gets lost in the discussion about senior housing affordability. Building itself is not the primary reason the monthly fee is $8,000. The lion's share of that expense is, in fact, the cost of providing services. We're talking about round-the-clock staffing, personal assistance, meals, housekeeping, supervision, medication management, and specialized care. These are not optional luxury amenities. These are essential components of the product that's actually being delivered. When someone

• 1:30Speaker 00

  says senior housing's unaffordable, they're often combining several fundamentally different things: the cost of housing, and the cost of care, and the cost of living. That distinction's important to understand the problem. A recent article from Senior Housing News examined the affordability challenges facing the industry. The article cited a 2025 survey by Whittington Consulting in which almost 59% of respondents believed senior living communities were unaffordable. Another 45% questioned whether they had saved enough money to cover their future healthcare needs. Now, these numbers reflect a growing disconnect between the services that older adults will eventually require and their financial capacity to pay them. For a young

• 2:13Speaker 00

  family, at least there's a possibility that household income would increase over time. A young professional might receive promotions, salary increases, they might change careers, or develop additional income streams. But for a retiree living on fixed income, that financial trajectory is quite different. Income could increase modestly with inflation, but often those expenses rise much faster, particularly when personal care becomes necessary. The challenge is that senior housing covers an enormous range of products. At one end, we've got independent living. Residents are generally capable of managing their daily activities. They want a smaller apartment, they want social interaction, convenient meals, and freedom from maintaining a house. The other end, you've got memory care, or in

• 2:57Speaker 00

  some cases, skilled nursing, where residents will require a lot more hands-on care. These are entirely different operating businesses, even though they all fall under this umbrella called senior housing. Perhaps the deeper issue is that we haven't adequately separated the price of real estate from the price of healthcare and personal support. Consider someone receiving $2,500 a month in social security and pension income. An independent living apartment costing $1,500 a month might be manageable, but I actually don't think there's any at that price point. The ones that I'm seeing are over $4,000 a month. But what happens when the individual needs three to four hours of assistance every day? What happens when cognitive decline requires continuous supervision? The housing cost

• 3:39Speaker 00

  could remain completely stable, but the cost of care escalates dramatically. There's only so much you can do in terms of architectural efficiency to help solve that problem. You can reduce construction costs with smaller units through standardized design, more efficient mechanical systems, maybe less expensive finishes. But you have to remember that senior housing is a regulated industry, and many of the features and unit sizes associated with senior housing are mandated in the legislation or in the zoning at the state level. And even if you solve that problem, none of the improvements eliminates the need for qualified caregivers. In fact, labor represents the number one cost, well ahead of the real estate. Staffing is by far the number one issue in senior housing, and certainly anyone in the business

• 4:22Speaker 00

  is trying to take steps to reduce staff turnover, to improve operational efficiency, and where it helps to introduce technology. But they don't fundamentally change the labor-intensive nature of assisted living and memory care. Now, it's interesting that in the survey, 79% of the people surveyed preferred predictable monthly rent over arrangement involving entrance fees. Predictability becomes extremely important when someone's living on fixed income. Now, there's one operator in Texas called 12 Oaks Senior Living. They maintain older properties built in the 1980s and 90s, and they offer independent living options with limited care services at monthly rates between $1,500 and $2,200 a month. Those older buildings provide

• 5:04Speaker 00

  an important contrast to newly constructed luxury communities. The ones that I'm seeing in the market are, like I said, over $4,000 a month. There's clearly an opportunity to deliver a more modest housing cost at lower cost, but not with new construction. That's only possible when you're dealing with older facilities where the cost to build was much lower 40 years ago, and you're able to buy those facilities at far below replacement cost. You're not going to be adding new supply to the market at that price point. Now, a resident might comfortably afford independent living at age 75, only to face substantially greater expenses when those care requirements increase at age 85. If the financial model only works during the early years, the resident may eventually be forced to move precisely

• 5:47Speaker 00

  when stability matters the most. So, some nonprofit operators are experimenting with alternative funding models. So that brings us to an important policy question. You see, traditional affordable housing programs tend to focus primarily on household income and rental costs. But a rent subsidy doesn't necessarily solve the affordability problem when the largest expense is, in fact, personal care. Housing policy and healthcare policy intersect together in senior living, and yet those funding mechanisms often operate independently. So, yes, we can create a highly efficient, affordable building, but if a resident requires $5,000 to $6,000 a month in personal care services, those total monthly expenses are going to be well beyond the means of any retirees. For real estate

• 6:30Speaker 00

  developers, there is an opportunity to create a little bit more efficient housing products. For healthcare providers, the challenge is in finding more cost-effective ways to deliver the quality care. Neither industry can solve the entire problem independently, and the demographic wave of aging baby boomers, it's already here. Many are in the independent living stage of life. They're not old enough yet, at least en masse, to be in assisted living, but that wave is coming. Question isn't simply whether we can build senior housing at lower cost. It's whether we can develop an economic model that makes both the housing and the services accessible to a much larger percentage of the populations who are definitely going to need them. So, we're not really talking about the affordability

• 7:12Speaker 00

  of housing. What we're really confronting is the affordability of aging itself, as you think about that. Have an awesome rest of your day. Go make some great things happen, and we'll talk to you again tomorrow.