photo credit: DCliber ty.

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ELKHART SENIOR H O U S I N G S T U DY
understanding the future needs of Elkhart s growing senior population

created Januar y 2014

t h is pa g e intentio nal l y l ef t bl ank

R E P O R T CO N S I D E R AT I O N S
This reports conclusions are based on our own analysis of the information available from various sources and those provided by the client as of the date of this report. Assumptions made about future population projections, trends, and demands are based stable growth patterns based on recent US Census, ESRI, and American Community Survey data. Significant changes to these assumptions like those caused by the recent recession may alter the findings of this report and are outside DCI and the clients control. The data presented here should be used as an initial test of the market; potential projects should utilize their own real estate market analysis to factor in changes to the market that may have affected the analysis presented in this report.

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E XIS T I N G CON D I T ION S

has forced the market to look at alternative methods for both aging in-place and traditional senior living options. Multi-generational living arrangements provide an affordable and social way for many seniors to age within their communities. Multi-generational households have historically provided care to aging senior parents. Living with extended family may increase as many seniors face depleting financial resources to pay for assisted living. Traditional single-family homes can easily accommodate multigenerational households, but some cities have made amendments to regulations and zoning to allow for mother-in-law suites or granny flats to provide additional independence and separation between the family household and senior household members.

Baby Boomers are entering their senior years and their choices will influence senior housing issues from now through 2030 as the balance of this generation reaches 65+ years. These seniors are predicated to live longer and will likely require a spectrum of housing options that provide a continuum of choices spanning from independent living to full-care nursing home facilities. Most seniors desire to age in-place, but unfortunately most seniors will reach a point where they are no longer physically able to stay in their homes and will require adequate housing for this transition. Currently there is an under-supply of appropriate senior housing in Elkhart and in the short-term (2-5 years), this demand will likely grow significantly as Baby Boomers transition from the workforce to retirement. During this transitional period, Elkhart has the ability to develop additional units to both meet the existing unmet demand for housing and add additional units for the forecasted influx for rental senior housing in the next five (5) to ten (10) years.

Ad d i t i on a l Dwel l i n g Un i t s ( ADU) p r ovi d e s ep a r a t i on b et ween fa m i l y a n d s en i or h ouseho lds i n a mu l t i -g en er a t i on a l l i vi n g a r r a n g ement.

National trends
The Baby Boom generation is one of the largest population segments in recent US history and will have a huge impact as they transition from traditional family households to empty nesters and finally into senior facilities. This population represents a growing demand for senior living options that will be larger than any previous generation before them. The need to accommodate this group, which could easily absorb a majority of the existing senior units,

photo credit: intentionallysmall.com

ELKHART SENIOR HOUSING market analysis

Senior co-housing provides a non-traditional option that allows groups of seniors to jointly share a property which may consist of a single housing unit, attached units, or condos as an alternative to aging independently in their own homes and having to suffer the financial burden of home health care. Within this cohabitation model, residents share cost, common space, amenities, caregivers and home health aids, and have the added benefit of increased social interaction. This model has been popular among the Baby Boom generation who has seen the negative effects associated with institutionalized senior care and seek alternative lifestyle choices. Naturally Occurring Retirement Communities (NORCs) referred to neighborhoods or groups of homes and buildings dominated by senior-aged householders. These naturally occurring clusters are not built with this purpose in mind, but have ensued due to an aging population that desires to age inplace. This approach to senior housing emphasizes partnerships that support the delivery of cost effective, community-based health and supportive services within a defined geographical area. NORC programs are typically supported by a blend of public and private funding from various service-provider agencies. While NORCs provide a continuum of care within an existing neighborhood, many communities are turning to master planned communities to serve their aging population. These planned communities often provide a continuum of care including independent living, assisted living, long-term care, and memory care and hospice options within a single, easily accessible campus. This new community provides convenient access to senior services and health care while providing social interactions among people in similar stages of life .

S en i or co-h ou s i n g commu n i t i es p r ovi d e no nt r a d i t i on a l l i fest yl e opt i on s t h a t r ed u ce co st and p r ovi d e i n cr ea s ed s oci a l i nter a ct i on .

photo credit: stillwater co -housing

Financially, many seniors entering retirement have lost significant retirement income, personal savings, and home equity as a result of the Great Recession. This reduction in financial well-being has moved more seniors into lower income brackets, reducing the resources needed to move into appropriate senior housing. This financial insecurity has influenced a developing trend among seniors to secure reverse mortgages to provide the financial resources to pay for daily needs such as groceries, medicine, transportation, and housing costs. These national trends are evident in Elkharts growing senior population and additional thinking is necessary to develop a strategy to support this population and reverse the effects it may have on the Citys housing market. In addition to housing costs, medical care and medications comprise a large portion of the monthly expenditures for seniors. As these costs continue to rise, seniors must dedicate a larger portion of their income to this expense, reducing their ability to pay for other daily needs such as groceries, home maintenance, and overall housing costs and could potentially lead to more seniors falling below the poverty line and unable to support themselves. Additionally, changes in insurance through the Affordable Health Care Act may change the cost of health care for this population group. While there are no direct changes in the Medicare eligibility,

Limiting fac tors to affordability

Rising cost of health care, changes in insurance and declining fixed-incomes are forcing more and more seniors to seek affordable housing options.

ELKHART SENIOR HOUSING market analysis

the Affordable Health Care Act may influence the savings and / or expenses associated with medical expenditures for seniors.

FIGURE 1:
Population Change over Time
Preschool 0-4 Young Adult 25-44 School Age 5-19 Older Adult 45-64 College Age 20-24 Seniors 65+

CO M M U N I T Y P R O F I L E D E M O G R A P H I C I N D I C ATO R S T H AT I M PAC T S E N I O R S
Over the next five (5) to twenty (20) years the Baby Boom generation will drastically increase the proportion of seniors in Elkhart. Baby Boomers are generally healthier, more energetic and more active than preceding senior generations. They have also experienced greater affluence, but due to the recent recession may have lost retirement savings and experienced reduced home values. These factors are leading many seniors to postpone retirement into their later senior years.

60,000 50,000 40,000 30,000 20,000 10,000

ol de ra d ts ul 45 -6

25-44 9 adults young hool age 5-1 sc

4 rs 65 +

n se

io

pre -school 0-4 college age 20-24

1990

2000

2010

2020

2030

2040

2050

Source: Stats Indiana

Population trends
Overall population change in Elkhart has been flat and based on recent growth trends, this pattern will continue in the short-term. This stagnant growth pattern is even more evident in the Citys workforceaged population (25 to 64 years), which lost population, in large part due to the economic effects of the recession. However, this loss would most likely have been much greater, if not for the in-migration of large numbers of younger, Hispanic families over the last two (2) decades. One age group that resisted this trend and is projected to continue growing is the senior population. Based on current trends, Elkharts senior population (age 55+), including the aging Baby Boom generation, is projected to grow by nearly ten (10%) percent. In some age cohorts that represents a nearly twenty (20%) percent growth over the next five years with seniors accounting for over one-quarter of the Citys population in 2017. This growing senior population will alter the citys current demands for housing, health and human services, and workforce availability as households transition from families to retirees and empty-nesters.

F i g u r e 1 a n d 2 s h ows t h e g r ow t h of t h e s enio r p op u l a t i on wi t h i n t h e C i t y of El kh a r t . T h e senio r p op u l a t i on , s h own i n F i g u r e 1 , i s t h e on l y age coh or t ex p ected to ex p er i en ce s i g n i fi ca nt grow th i n t h e u p comi n g d eca d es . T h i s wi l l l ea d to a shift i n t h e m a keu p of El kh a r t s p op u l a t i on a s s how n in Figure 2.

FIGURE 2:
Age Cohor ts as a Percent of Total Households

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

+75 65-74 55-64 45-54 25-44

+75 65-74 55-64 45-54 25-44

75+ 65-74 55-64 45-54 25-44 <25 years

<25

<25

2010

2017

Source: US Census ACS 2010-2012 Estimates

ELKHART SENIOR HOUSING market analysis

F igure 3 and 4 s h ow t h e i m p a c t City of the r eces s i on Elkhart and Unicorporated little Elkhart ability to County re-purpose them. on t he greate r h o u s i n g m a r ket , w i t h a s ig n i fi ca nt dec rease in n ew h o u s i n g co n st r u c t i o n i n t h e yea r s leading up to th e p e a k o f t h e r ece s s i o n in 2 0 0 9 , Since the onslaught of the recession, housing growth as shown in F i g u r e 3 . No t o n l y h a s s u p pl y of within the City of Elkhart has dramatically decreased housing unit s d e c r e a s ed , a s th e p o p u l a ti on h a s dec lined so h a s th e d em a n d fo r h o u s i n g u n i t s , from its pre-recession growth rate, with current reflec ted in F i g u r e 4 .

NEW RESIDENTIAL BUILDING with anPERMITS oversupply of large, single-family homes with

FIGURE 3:
Total Building Permits in Elk har t & County
1,000 # RESIDENTIAL PERMITS 800 600 400 200 0 8 1996 1997 1998 1999 2000 64 43 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Unincorp SFR Unincorp MFR ElkCity SFR ElkCity MFR

853

projections for the next five years indicating little to no growth. The recession also impacted household growth which is a factor used in determining demand for new housing. During the Great Recession, Elkhart lost households, however, recovery from the recession altered this growth pattern and new projections indicate that the City will slowly begin to add at a rate of less than one (1%) percent, new households in the near-term. In the case of Elkhart, the number of housing units, which represents the supply, is already greater than the demand for units and housing growth is projected to increase at a greater rate than household growth. Vacancies are already reflecting the impacts of the recessions distressed housing market which created a vacancy rate near fifteen (15%) percent and is expected to increase over the next few years. The most likely culprit of this increase is due in large part by the effects of an aging population and their changing housing needs. As seniors age out of their housing and into apartments, assisted living, or nursing homes, an influx of single-family homes will come onto the market. In Elkhart there is currently little to no new demand to absorb these units and the already high vacancy rate may continue. This downward pressure on the Citys housing market will force some seniors to remain in their homes due to the inability to sell in the distressed market. As their ability to maintain their homes decrease, due to physical and financial ability, homes have the potential to fall into a state of disrepair. There will be an increasing need to assist senior homeowners to relieve the financial burden of homeownership on limited incomes and the ability to access supportive services, as this population continues to increase with little to no ability to move out of their homes and into appropriate senior housing.

Source: U.S. Bureau of Labor Statistics

FIGURE 4:
Basic Supply Demand Analysis

2013 SUPPLY = Housing Units DEMAND = Households SUPPLY - DEMAND = Vacancy

2018

22,500 19,187 3,313

22,738 19,262 3,476

Source: US Census ACS 2010-2012 Estimates

Housing trends
National trends reflect changes in housing needs and preferences between the aging Baby Boomer generations and growing millennial population. This disconnect between the two groups is causing growing concerns with the ability to transition existing housing from one generation to the next, leaving many cities

ELKHART SENIOR HOUSING market analysis

Employment trends
The recent economic downturn caused employment rates across the country to plummet. Elkhart did not escape these effects, unemployment numbers in the City climbed to a nation-wide high of over twenty (20%) percent at the height of the recession. Today, employment has risen, nearly reaching pre-recession numbers due in large part to substantial employment growth in 2012 when Elkhart led the nation in this category.

among seniors entering retirement because pension plans have been cut or reduced, the age to redeem social security benefits has increased, and personal savings have been depleted by debt and the recent economic crisis. With housing making up a large part of seniors expenses, affordable housing options will be a key factor in allowing seniors to live within their tightened fixed incomes.

Effec ts of the Recession

The recession changed the financial situation for The recent upward trend in the economy has created many seniors, who lost significant income and Elkhart County Unemployment Rate opportunities for Elkhart to attract new industry and savings as they neared retirement age, forcing them, rebuild its manufacturing base. Job opportunities if possible, to remain in the workforce longer and and job growth will remain a primary concern for both put off retirement. In addition to the loss of income, older adults and seniors as the average retirement many seniors are now faced with significantly lower age rises to sixty-one (61), up from fifty-seven (57) housing values and insufficient demand limiting their two decades ago. There is a financial weariness ability to sell their homes. These decreased housing values have, on one hand made homeownership more affordable within the City, but at the same FIGURE 5: time limited the mobility of seniors who desire Elk har t County Change in Unemployment to move from their large, family homes into high 25 Elkhart County Unemployment Rate quality senior housing developments. These factors 20.2% have forced many seniors to remain in their homes 20 much longer than desirable. With limited financial and physical ability to maintain their properties, 15 Elkhart could see a negative change in the quality of senior homes due to deferred maintenance. If 10 left unchecked, deteriorated homes could have a 8.2% domino effect and reduce the value of the Citys 5 housing stock even further.
% UNEMPLOYED Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan 0

2003 2004 2005 2006 2007 2008 2009 2010 2011 20122013

Source: U.S. Bureau of Labor Statistics

S U P P LY S E N I O R H O U S I N G I N V E N TO RY A N D A N A LYS I S O F E X I S T I N G CO N D I T I O N S
Senior housing options
Approximately two-thirds of Elkharts senior population (65+) reside in single-family units. Most seniors desire to remain in their homes for as long as they are physically able to care for themselves and their property. National trends indicate that

F igure 5 reflec t s t h e c h a n g es i n E l k h a r t C o u nt y s u nem ploy m ent r a te l e a d i n g u p to t h e 2 0 0 9 r ecession and a f ter. D u r i n g th e r eces s i o n , Elkhart C ount y l ea d t h e n a t i o n i n u n e m p l oyment , b ut recent em p l oy m ent g r ow th d r a m a t i ca l l y d ec reased t he r a te to ju st a b ove 8 % .

ELKHART SENIOR HOUSING market analysis

more seniors are turning to home health care options to increase their ability to age in-place. This trend appears likely to continue in Elkhart due to the affordability of homeownership, a decreasing demand for single-family homes, and a lack of suitable senior-living options. Seniors who age in-place need additional services typically provided in many senior-living communities. These may include home health care, financial assistance, home maintenance or home repair assistance, and modifications to existing units to accommodate aging homeowners. Other aging in-place options include multi-generational living and non-family living arrangements that provide additional opportunities for seniors to remain in the community. Options within the City of Elkhart offer seniors a full spectrum of housing choices for those who desire to eliminate the responsibility of maintaining a home or have health issues independent apartments, assisted living communities, and nursing homes / memory care centers. Most of these facilities cater specifically to one senior housing type, however continuum of care facilities offer a range of housing types that allow seniors to transition to appropriate housing as their needs progress. Design of senior housing facilities have greatly changed in Elkhart since the 1980s when traditional high-rise developments were the predominate building type. Today, senior developments tend to be low-rise, accessible apartment buildings that provide lifestyle amenities, a sense of community, and health services that support the Citys aging population. Senior housing campuses, which offer a continuum of care, are a growing trend nation-wide and within Elkhart County. Facilities within the County offer options for seniors looking for increased social interaction and access to convenient care services. The integration of health care within the campus design or nearby reduces the cost for operators and provides more efficient services to their residents.

FIGURE 6:
Existing Senior Housing Options

18% 35% 15% 32%

Market-Rate Assited Market-Rate Assisted Living Living

Market-Rate Market-Rate Independent Living Independent Living Affordable Affordable Indepedent Living Indepedent Living Nursing // Memory Nursing Memory Care Facilities

Care Facilities

Source: DCI 2013 Senior Housing Inventory

Fi g u r e 6 s h ows t h e b r ea kd own of s en i or ho using by u n i t t yp e wi t h a m a jor i t y d es cr i b ed a s marketr a te. On l y a s m a l l p or t i on of El kh a r t s s enio r h ou s i n g opt i on s a r e con s i d er ed a f for d a b l e.

THE CONTINUUM OF SENIOR HOUSING

Independent Living Units are age-restricted apartments, often designed to accommodate the physical and social needs of seniors. Community atmosphere and age-appropriate services make these units attractive to seniors who can live independently, allowing them to maintain an active lifestyle. Assisted Living Facilities provide limited services such as personal grooming, housekeeping, and meals for seniors with limited physical and / or mental abilities. Residents of assisted living facilities typically cannot or choose not to care for themselves independently and require some form of daily assistance. Nursing Home or Memory Care Facilities provide intensive, 24-hour care for nearly all personal needs of residents. Most residents of these facilities have physical, mental, or other health issues that do not allow them to care for themselves.

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ELKHART SENIOR HOUSING market analysis

FACILITY
MEALS LIBRARY STORAGE YEAR BUILT WORKSHOP WAITING LIST CRAFT ROOM DINING ROOM HOUSEKEEPING FITNESS CENTER WALK-IN CLOSET BALCONY / PATIO TRANSPORTATION GARAGE PARKING NUMBER OF UNITS COVERED PARKING COMMUNITY ROOM FULL / PARTIAL KITCHEN RESIDENT CARE SERVICES SINGLES / DOUBLES (S/D) BASE MONTHLY RATE - S/D AVERAGE UNIT SIZE S/F - S/D

AMENITIES

SERVICES

1 1997 1998 1920 1960 1987 1960 1968 2008 2002 1977 2006 1970 1970 1960 2000 1960 2,180 80 52 X 44 X X 160 X 48 0/96 $188/$199 88 X 198/352 $227/$371 X 251 X 54/44 $2150/$2900 430/630 X X X 80 X X X X X X X X X X X X X X X 38 X $1,500 1250 X X X X X 750 X 650/150 $1,500 1250 X X X X X 120 X X X X X X X X X X 105 X 38/67 $205 180 64 88 X 88/0 89 55/34 $1800/$2000 X X X X X X X X X 39 X 8/31 $1500/$2100 400 X X X X X X X

Atria of Eastlake Terrace

1998

84

78/6

$1950/$2950

550/700

X X X X X

X X X

X X X

Beardsley House

Brentwood at Elkhart

Cornerstone Apartments*

Courtyard Healthcare Center

East Lake Nursing and Rehabilitation Center

Golden Living Center

Greencroft Healthcare -Goshen

X X X

X X X

X X X X X

X X X X X

X X X

FIGURE 7a:

Greencroft Healthcare -Middlebury

10

Greenleaf Health Campus

11

Hubbard Hill Estates, Inc.

X X

12

Maples at Waterford Crossing Health Campus

Senior Housing Inventor y for Elk har t County

13

Riverside Village

14

Stratford Commons

15

Kindred Valley View Health Care Center

16

Water Tower Place*

17

Woodland Manor

Total

* A limited number of units in these facilities may not be restricted by age. The data in this table reflects conditions in 2013.

FIGURE 7b:
Senior Housing Inventor y for Elk har t County
E LKH AR T COU NT Y S ENIO R HO U S ING YE A R B U I LT 1998 1997 1998 1920 1960 1987 1960 1968 2008 2002 1977 2006 1970 1970 1960 2000 1960 A PP R OX . U N I TS 84 39 89 88 64 105 120 750 38 80 251 88 48 160 44 52 80 X X X X X X X X X X X X X X X X X MA R K E T X X X X A F F O R DA B L E P U BL IC

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Atria of Eastlake Terrace Beardsley House Brentwood at Elkhart Cornerstone Apartments1 Courtyard Healthcare Center* East Lake Nursing and Rehabilitation Center Golden Living Center* Greencroft Healthcare -Goshen Greencroft Healthcare -Middlebury Greenleaf Health Campus Hubbard Hill Estates, Inc. Maples at Waterford Crossing Health Campus Riverside Village Stratford Commons* Kindred Valley View Health Care Center* Water Tower Place Woodland Manor*

1 Rehabilitated in 2000 * Facility did not respond to inventory survey, year built and number of units are estimates Source: Leedy Architects, DCI

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ELKHART SENIOR HOUSING market analysis

Custom Map

FIGURE 7c:
Senior Housing Inventor y for Elk har t County

6 1 13 17 14 11 2 7 15 10 4 16 9 3

12 8 5

June 04, 2013

2013 Esri

Made with Esri Business Analyst ELKHART SENIOR HOUSING market analysis www.esri.com/ba 800-447-9778 Try it Now!

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Independent Living Units are age-restricted apartments, often designed to accommodate the physical and social needs of seniors. Community atmosphere and age-appropriate services make these units attractive to seniors who can live independently, allowing them to maintain an active lifestyle. Assisted Living Facilities provide limited services such as personal grooming, housekeeping, and meals for seniors with limited physical and / or mental abilities. Residents of assisted living facilities typically cannot or choose not to care for themselves independently and require some form of daily assistance. Nursing Home or Memory Care Facilities provide intensive, 24-hour care for nearly all personal needs of residents. Most residents of these facilities have physical, mental, or other health issues that do not allow them to care for themselves.

Bu i l t i n t h e 1 9 6 0 s , t h e Ros ed a l e h ou s i n g co mplex of fer s over 1 0 0 a f for d a b l e s en i or u n i t s for h ou s eh ol d s m a ki n g u n d er 3 0 % AM I .

photo Credit: Development Concepts, Inc.

Senior housing inventor y

A recent inventory of senior housing options revealed that the supply has been stagnant for the past ten (10) years, while the senior population within the City has grown dramatically. There has been no new senior housing constructed for low- to moderateincome seniors since 1977 and many of the older developments are in need of significant upgrades and renovations. A number of the aging buildings are in need of HVAC and electrical upgrades, raising operating cost due to the inefficiency of the outdated systems. Additionally, some of the older facilities have not been updated to meet current ADA requirements due to structural or financial constraints. While some of the older units are not as compatible with the current needs of the aging population, the City is not without modern facilities. Much of the new senior housing was built in the decades between 1990 and the later part of the last decade.

Primary interviews with senior housing operators revealed that most facilities in Elkhart had vacancy rates around five (5%) percent or less and a majority of them had waiting lists that would adequately fill these vacancies. The low vacancy rates and waiting list indicates a pent-up demand for senior housing that is not being met by the current supply. Of the existing supply of senior housing, nearly twothirds are market-rate rentals. The market rate units, which range in rent from $1,000 to $2,000 a month, tend to be newer than their affordable counterparts and typically offer a wider range of services and amenities. Public and subsidized housing make up a majority of the remaining units, with public housing accounting for only a small portion of all senior housing in Elkhart. Public housing units are incomerestricted units available to the lowest income residents with household incomes below thirty (30%) of the Area Median Income (AMI).

Amenities and health care needs

Not dramatically different from amenities offered within a typical, non-age restricted housing development, senior amenities tend to focus on providing well-rounded services that limits the need for residents to leave the facility for daily needs.

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ELKHART SENIOR HOUSING market analysis

These services can include community rooms, dining options, fitness centers, crafts and entertainment, protected parking, housekeeping, and health care services. Access to health care is a significant driver of senior housing, especially in assisted living and nursing home facilities where most residents have health concerns that require daily attention by health care providers. Recent developments have seen decreases in operational cost by locating in proximity to regional health care providers due to the high demand by their residents. Clustering senior housing options near one another or adjacent to hospitals or medical business clusters may reduce the overall cost of housing and health care within the senior population.
S enior housing co m m u n i ti es p r ovi d e a va r i et y of built-in am enit i es th a t a l l ow s e n i o r s to m a i nta i n an ac t iv e and s o c i a l l i fest y l e.

meets the requirements of the program and includes single-family rental units. The voucher program is administered locally by public housing agencies (PHAs) who receive funding from HUD. Elkhart is eligible to receive the Housing Choice Vouchers but has not yet applied for additional credits through this program. The City should re-investigate the ability to utilize this program to provide housing assistance to the growing senior and low-income communities. Another federal program that requires additional investigation is Section 202 which provides financial assistance in the form of capital advances to cover construction, rehabilitation, or acquisition cost related to housing for very low-income seniors. HUD provides private and non-profit developers with interest-free capital. As long as the project serves low-income seniors for the forty (40) year eligibility period, the capital does not need to be repaid and acts as a grant to the recipient.

Demand Drivers for Senior Housing Population trends

Population projections, based on past growth patterns, indicate the City of Elkharts population will continue to decline overtime if social and economic conditions remain relatively stable over the next decade. The Citys workforce base shows the greatest loss, which could impact Elkharts major employers, but also presents an opportunity to attract new residents. The most noteworthy change is expected to occur in the senior (55+) population, which shows significant growth as the Baby Boom generation reaches retirement age. Within the next five (5) years, twenty-five (25%) percent of Elkharts population will be fifty-five (55) years or older. The largest portion of the growth is expected to occur in the sixty-five (65) to seventyfour (74) age range - recent retirees. This population segment represents the first wave of demand for senior-specific housing and increases as the population ages, with demand increasing significantly when people reach seventy-five (75) years of age.

photo Credit: The Terraces of Los Gatos

Federal Housing Programs

A federal program delivered by the Department of Housing and Urban Development (HUD), the Housing Choice Voucher Program provides financial assistance to very low-income families, elderly, and disabled households with an emphasis on those earning below 30% of the Area Median Income (AMI). The housing voucher allows eligible households to rent housing of their choice that

ELKHART SENIOR HOUSING market analysis

15

Housing trends
Housing values suffered substantially from the economic downturn of the recent recession. Additionally, reduced housing demand due to insufficient workforce population growth, declining in-migration from employment loss, changes in housing needs, growth in the County, and an aging population, indicates little change for Elkharts housing market. Without intervention, the potential for continued decline is a real concern for the City. These factors have greatly impacted the senior population, causing many to remain in their homes due to a dramatic reduction in the value and an inability to sell during a slower housing market. However, data shows the demand for owner-occupied housing units is expected to increase, predominately in upper income households. Both nationally and at the local level, homeownership demand increases until residents reach seventy-five (75) years of age, and then progressively decreases as they age. This increased demand reflected in the data is most likely coming from Baby Boomer households, who significantly outnumber the previous generation. This population segment already owns their own homes and is now reaching senior age; therefore a growth in households that make up this age group is realized. Owner-occupied housing units are dominated by upper- and middle-income households. While homeownership is affordable to many in Elkhart, very low- to moderate-income households tend to occupy the majority of rental units. Looking at the general population, not just seniors, the lower incomes those who could qualify for subsidized or affordable housing make up ninety-seven (97%) percent of all renters. However, rental trends differ greatly between various age groups. Currently, only thirty-one (31%) of seniors rent and make up a very small portion of the total rental market, accounting for just over twelve (12%) percent of all renters.

Economic trends
Since the recession, the national economy has seen positive growth and at the local level, growth that has made Elkhart one of the fastest growing employment bases in the country. This economic recovery provides a positive outlook for job seekers, but will have a less positive impact on the senior community. Many seniors will continue to face economic conditions based on reduced savings, lowered home values, fixed incomes, and rising medical costs. While the recession may have impacted seniors negatively; population and economic trends indicate that Elkhart will experience a decrease in low- and moderate-income senior households over the next five (5) years. The biggest changes to senior households will occur at the top and the bottom of the income strata. Middle- and upper-income households are expected to increase by twentyfive (25%) while the lowest earning households are projected to increase by eleven (11%) percent. This will create increased demand for public housing, reduce demand for affordable units, and drive up demand for market-rate rental units. Housing affordability becomes an issue for seniors living on fixed-incomes. Senior incomes fell during the last decade forcing many households to live on less income, reduced savings, and fewer retirement benefits. Typically, as seniors age, their incomes decrease making housing less affordable, and it may become very constrained on fixed-income budgets.

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ELKHART SENIOR HOUSING market analysis

2
Public Housing <30% AMI Market Rate >80% AMI

H O U S I N G A NA LYS I S
account for less than forty (40%) of the units in the market. For every one occupied affordable unit, there is demand for three (3) additional units. This has created a significant housing gap, leaving lowand moderate-income households, those most in need of housing options, with very few choices. With no plans to bring additional affordable units into the market, low- and moderate-income households even when projected to decrease over time will still be

SENIOR HOUSING NEEDS ASSESSMENT

Current Rental supply / demand analysis

Based on the recent rental housing inventory*, Elkharts overall supply of senior housing, independent of residents income levels, currently meets the demand. When you begin to look at each income segment, it becomes evident that there are not enough affordable and public housing units to meet the current demand created by that subset of the population. Senior households that earn below 80% AMI qualify for affordable housing and represent nearly twothirds of the current demand for senior housing. In contrast, affordable and public housing units
FIGURE 8:
Current Supply / Demand Analysis for Rental Units
Current Demand 808 1,843 1,352 Current Supply 86 550 1,544 Supply / Demand -722 -1,293 202

I N CO M E D E F I N I T I O N S
Area Median Income (AMI) is defined annually by HUD and used to determine affordability. Incomes limits are adjusted based on the size of the household (between 1 and 8 persons.) Most program income eligibility is based on AMI and range from 30% to 125% based on the funding source, mix of funds, and intended use of funds. Public Housing <30% AMI for this report represent households who earn below 30% AMI and are considered extremely low-income and would be eligble for public housing assistance. Affordable Housing 30%-80% AMI for this report represents a range of households considered to be low- to moderate-income. These households may qualify for various housing assistance programs offered at the federal, state, and local levels. Market Rate >80% AMI for this report represents households who likely do not qualify for housing assistance.

Affordable Housing 30%-80% AMI

Source: DCI Analysis and US Census ACS 2010-2012 Estimates

F igure 8 shows th e g a p b etw e en a va i l a b l e h ousing. * D em a n d , i n d i ca ted by ex i sti n g s e n i or h ouseholds, is g r ea ter i n m o st ca s es t h a n t he current supply, d eter m i n e d by t h e Sen i o r H o u s i n g Inv entor y.

ELKHART SENIOR HOUSING market analysis

17

FIGURE 9:
Housing Costs & Affordability Assumptions (based on housing costs as 30% of total gross income)

Monthly Payment
low Single-Family Ownership Market-Rate Rental Fair Market-Rate Rental Affordable Rental Public Housing Assisted Living Nursing Home $412 $875 $459 $485 $291 $2,150 $6,000 high $617 $3,000 $1,130 $996 $374 $2,950 $9,000

Yearly Payment
low $4,939 $10,500 $5,508 $5,820 $3,495 $25,800 $72,000 high $7,409 $36,000 $13,560 $11,955 $4,485 $35,400 $108,000

Gross Income Needed

low $16,465 $35,000 $18,360 $19,400 $11,650 $86,000 $240,000 high $24,697 $120,000 $45,200 $39,850 $14,950 $118,000 $360,000

Fi g u r e 9 s h ows t h e gro ss i n com e n eed ed to af fo rd va r i ou s h ou s i n g optio ns wi t h i n El kh a r t . Ho using is con s i d er ed a f for d able w hen a h om eown er or r enter spends l es s t h a n 3 0 % of t heir gro ss i n com e on h ou s i n g co sts. Fi g u r e 1 0 i n d i ca tes the a f for d a b i l i t y of h ousing opt i on s . T h e col u mn o n the l eft r ep r es ent s a p pro priate a f for d a b l e r ent r a nges fo r ea ch i n come st r a ta. The r ema i n d er of t h e table i n d i ca tes t h e p er centage of a h om eown er or renter s i n com e n eed ed to cover thei r m ont h l y h ou s i n g expenses.

Source: DCI Analysis with data from HUD, Senior Rental Inventory, interviews with operators.

FIGURE 10:
Affordability Analysis

SingleFamily Ownership
Household Type 30% AMI $291-$374 50% AMI $485-$623 80% AMI $775-$996 100% AMI $994-$1,278 MHI 1 person 2 person 3 person 1 person 2 person 3 person 1 person 2 person 3 person 1 person 2 person 3 person 55-64 household 65-74 household 75+ household HUD income limits $11,650 $13,300 $14,950 $19,400 $22,150 $24,900 $31,000 $35,400 $39,850 $39,760 $45,440 $51,120 $40,354 $32,738 $20,870 42% 37% 33% 25% 22% 20% 16% 14% 12% 12% 11% 10% 12% 15% 24%

MarketRate Rental

Fair Affordable MarketRental Rate Rental

Public Housing

Assisted Living

Nursing Home

90% 79% 70% 54% 47% 42% 34% 30% 26% 26% 23% 21% 26% 32% 50%

47% 41% 37% 28% 25% 22% 18% 16% 14% 14% 12% 11% 14% 17% 26%

50% 44% 39% 28% 25% 22% 18% 16% 14% 14% 12% 11% 14% 17% 26%

30% 26% 23% 18% 16% 14% 11% 10% 9% 9% 8% 7% 9% 11% 17%

221% 194% 173% 133% 116% 104% 83% 73% 65% 65% 57% 50% 64% 79% 124%

618% 541% 482% 371% 325% 289% 232% 203% 181% 181% 158% 141% 178% 220% 345%

Source: DCI Analysis of Housing Inventory, HUD

>50% of gross income - severely cost burdened 35%-49% of gross income - cost burdened 25%-35% of gross income - slightly cost burdened <25% of gross income

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ELKHART SENIOR HOUSING market analysis

grossly underserved in Elkhart and the surrounding market. Very-low income households, those who earn less than 30% AMI, currently do not have access to an adequate supply of housing. Senior households that qualify for public housing are expected to increase over the next five (5) years. Under-supplied in the current market, growth in this income segment will only intensify the problem, leading to an even greater housing gap in the near-term. The only market that is currently met by the existing housing supply is market-rate senior units, where supply adequately meets the existing demand. However, projected to grow by twenty-five (25%) percent over the next five (5) years demand for this housing type will increase dramatically. If no additional units are brought into the market, the current supply, even though it slightly outweighs the demand, will not meet the additional demand.

that route, others will move into market-rate units they may not be able to afford, forcing them to make choices between daily needs such as food, clothing, and medicine to cover their monthly housing costs.

Rental demand projec tions by housing / market type

As the Baby Boom generation ages the size of the senior population is projected to grow disproportionately to other age groups in Elkhart and throughout most communities across the country. This growth will severely affect senior housing, supportive services, that were designed to serve the much smaller senior population of past generations. Between 2010 and 2017, the senior population (age 55+) will grow by
Fi g u r es 1 1 a n d 1 2 s h ows t h e p r ojected g r ow th of s en i or h ou s eh ol d s wi t h i n ea ch i n com e strata. Fi g u r e 1 2 r ep r es ent s t h e est i m a ted ch a n g e in the n u m b er of h ou s eh ol d s wi t h i n ea ch i n com e strata a n d wi t h i n ea ch a g e r a n g e.

Affordability analysis
Based on existing housing costs and income ranges, homeownership appears to be the most affordable housing option for seniors. This affordability may be linked to the higher than average number of seniors within Elkhart that have remained in their homes well into, and in some cases, past retirement. While this option may appear affordable at first glance, it does not include the cost to provide any services or amenities that are offered in traditional senior housing communities. Senior market-rate apartments present the most financial burden to Elkharts seniors. This housing option is only affordable to middle- and upperincome households. There are options for seniors to secure public housing and subsided units, but the current demand which is expected to grow exceeds the current supply, leaving many low income seniors to seek out substandard, low rent options that do not provide the services needed by the senior population. While some low-income seniors may go

FIGURE 11:
Senior Household Growth 2012-2017

55-64
<30% AMI 30%-50% AMI 50%-80% AMI 80%-120% AMI Market Rate

65-74
15.5% -6.2% -4.2% 11.1% 53.4%

75+
4.5% -16.7% -16.3% 3.2% 35.2%

-5.1% -31.4% -25.6% -2.4% 29.6%

Source: DCI Analysis of ACS 2010-2012 and ESRI data

FIGURE 12:
Projected Demand for Senior Rental Units
Total HH
<30% AMI 30%-50% AMI 50%-80% AMI 80%-120% AMI Market Rate

55-64
-24 -98 -24 -14 63

65-74
85 -41 -72 143 98

75+
31 -158 -170 20 27

93 -298 -74 149 188

Source: DCI Analysis of ACS 2010-2012 and ESRI data

ELKHART SENIOR HOUSING market analysis

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an additional thousand households and make up twenty-five (25%) of the total households in the City. Within that age group, the subset between sixtyfive (65) to seventy-four (74) represents the first significant increase in senior housing needs. This age group is projected to grow the fastest, increasing by nearly twenty (20%) within five (5) years. Based on recent economic trends, the economic outlook for Elkharts seniors is more positive than it had been during the recession. An analysis of projected household income segments showed positive growth for the middle- and upper-income households with a decline in the number of households that would be eligible for subsidized or affordable housing units. On the other end of the spectrum, very low-income households those who earn under 30% AMI, are also projected to grow, but at a much slower rate. What these projections indicate is that in the short-term (2-5 years), the demand for subsidized and affordable senior housing units will remain high, but looking at long-term growth (5-10 years) the analysis shows signs that this demand will begin to decrease and alternatively demand for market-rate units will increase. Utilizing both the projected population changes paired with income distribution projections and senior rental trends, demand over the next five (5) years for market-rate rentals are expected to grow. Another market segment with potential growth is public housing where data indicates future demand in the short-term.

Projec ted rental supply / demand analysis

A basic supply / demand analysis indicates that over the next five (5) years as demand for senior housing continues to grow; an already under-supplied market will not meet the mounting housing needs of Elkharts senior population. Even with projected decreases in low- to moderate-income senior households, there will still be an unmet housing demand for subsidized and affordable units. With increases in the very low-income as well as market-rate households, the demand for all types of housing will quickly outpace the existing supply leaving Elkhart seniors with very few options for high quality, affordable housing. Current projections indicate that there could be an overall unmet housing demand in excess of 1,500 to 1,800 units over the next five (5) years, with a majority of those units targeted towards low- and moderate-income populations. Public housing units will continue to be in demand, and with no new units proposed, the current under-supply of units is projected to increase. In this short-term timeframe of two (2) to five (5) years, the increased demand for market-rate units will quickly absorb the existing supply of units and create an unmet demand within the market for this price range.
Fi g u r e 1 3 i n d i ca tes t h e p otent i a l a bs or ptio n o f s en i or r enta l h ou s i n g u n i t s b a s ed on t h e current s u p p l y of s en i or h ou s i n g a n d t h e p r ojecte d d ema n d . T h i s a n a l ys i s r efl ect s t h e ex i st ing supply of h ou s i n g wi t h n o a d d i t i on a l p l a n n ed u nits, a ny u n i t s con st r u cted a fter t h e wr i t i n g of this r ep or t wi l l a f fect t h e p otent i a l s u p p l y / demand a n a l ys i s .

FIGURE 13:
Projected Supply / Demand Analysis for Rental Units
% growth
Public Housing <30% AMI Affordable Housing 30%-80% AMI Market Rate >80% AMI

Projected Demand (city) 901 1,375 1,679

Current Supply (county) 86 550 1,544

Supply / Demand -815 -825 -135

Annual Absorption 163 units 165 units 27 units

11% -25% 25%

Source: DCI Analysis of ACS 2010-2012, ESRI, and Senior Housing Inventory data

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ELKHART SENIOR HOUSING market analysis

R ECO M M E N DAT ION S

Public housing is currently under-supplied as well within the Elkhart market, with approximately forty (40%) of the current demand met by the existing supply. Interviews with public housing operators supported these findings, indicating there were waiting lists for a majority of these facilities. This current unmet demand will continue to increase as this segment of the population is expected to increase by eleven (10%) percent over the next five (5) years. Additional public housing units, set aside for households earning less than 30% AMI, are currently needed within the market with the ability to absorb an additional 150 to 175 units annually for the next five (5) years.

Elkharts population is expected to remain steady over the next five (5) years with the exception of the senior population which is projected to grow by nearly twenty-five (25%). The current supply of rental housing targeted towards senior households does not adequately meet the current demand and will seriously under-serve any future demand as this population continues to expand over the shortterm. Development opportunities within the market present the City of Elkhart with new opportunities to accommodate the housing needs of this growing population segment.

S E N I O R R E N TA L H O U S I N G M A R K E T D E V E LO PM E N T OPPORTUNITIES
Shor t-term oppor tunities
Based on the current supply / demand analysis for the City of Elkhart, senior housing needs are not being met within the current market. Low- and moderate-income households are greatly underserved, with present supply meeting only thirty (30%) of the estimated demand for affordable rental units. With an already under-supplied market, any growth will increase this housing gap. While this population segment is expected to decline, the existing unmet demand will be able to absorb any new units constructed within the City. Affordable units, available to households with incomes between 30% and 80% AMI, could be absorbed at a rate of 150 to 175 units per year over the next five (5) years.

Long-term market oppor tunities

Even with a projected decrease in household growth for this income segment, affordable units will continue to be in demand until enough are developed to meet the existing need. Long-term (510 years) projections indicate that households falling into this income strata will decline by approximately twenty-five (25%) percent over the next five (5) years and reduce the current demand for affordable units from over 1,000 units (in 2012) to roughly 500 to 750 units in 2017. If current demands are not met in the short-term, there will be a continued need to construct additional affordable units in the longterm. Both in the short-term as well as the long-term, public housing provides a development opportunity in Elkhart. Expected to grow by approximately eleven (11%) percent over the next five (5) years,

ELKHART SENIOR HOUSING market analysis

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households earning less than 30% AMI will be underserved by the current supply of public housing by about 800 units. Housing to support verylow income households represents a long-term development opportunity; the number of units that could be absorbed over the next five (5) to ten (10) years depends on construction of new units in the short-term timeframe. Growth in the middle- and upper-income households represents a long-term development opportunity for Elkhart to increase their number of market-rate rental units. The projected growth of these households amounts to approximately 120 to 150 new units that could be absorbed into the market over the longterm. In addition to growth in these income ranges, rental housing numbers are projected to increase among all age groups with younger generations demanding greater amounts of rental units. If continued growth rates of middle- and upperincome senior households are sustained, demand for market-rate housing will exceed current supply over the next five (5) years and appear to support the ability to absorb fifteen (15) to forty (40) units annually within the long-term period.

sell their homes. No matter the reason, Elkhart must rethink the definition of senior housing and how this population will access senior care and services in a home-based setting. Recent housing and economic data for Elkhart indicates that homeownership is one of the most affordable options for senior housing in the City. This affordability does not include access to health care, senior services, or the sense of community created within many senior housing campuses. There are many non-traditional senior housing options that can provide necessary services that deserve additional exploration multi-generational living, non-family living, senior co-housing, home nursing care, or naturally occurring retirement communities. These alternative housing options reflect a growing desire by many seniors to age in-place or in a homebased setting for financial and social reasons and present new opportunities for Elkhart to satisfy the increased demand within the senior community.

O P P O R T U N I T I E S TO SUPPORT SENIOR HOMEOWNERSHIP

Much of the short- and long-term development opportunities are based on growth projections of rental housing demand, but there is projected growth in owner-occupied housing units within the senior population. The Baby Boom generation represents a large influx of households aging into what is considered senior age cohorts. Traditionally, this large population segment comes from a generation where homeownership levels were high. This continues to be the norm as Baby Boomers age. In some cases they remain in their homes due to a desire to age in-place, while others mobility is limited due to economic hardships and lowered housing demand that directly affect their ability to

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ELKHART SENIOR HOUSING market analysis

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ELKHART SENIOR HOUSING market analysis