David Hall is president of Currie-Hall Investment Co., an industrial real estate brokerage and development firm based in Hudson, Ohio.
Providing appropriate rental units for older adults in a way which includes and encourages socialization, exercise, dignity, and better diets is a win for quality of life, meaningful involvement, and volunteerism. By combining tax abatement for new, older adult housing with the older adult housing paying an EMS fee in lieu of real estate taxes on the improvements (which affirms the viability of the entire EMS service to the entire community) affordable rental rates can be better achieved.
Affordable rental rates for older adult apartments are possible and affirmed by the elimination of existing housing ownership expenses (RE taxes, insurance, utilities, maintenance, etc., maybe $1,000/month) combined with new income from an investment return on the home equity realized from the sale of their home (maybe another $1,000 /month).
With the creation of affordable housing for young families, the community can better capture an increasing share of the diminishing number of children in the demographic pipeline while sustaining the necessary financial operating economies of scale necessary to operate the existing school.
Fortifying this component of community viability averts the impending demographic crises while enabling schools to be vibrant providers of workforce development and affirming entire community housing values. Everybody wins!
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I like this idea and even though I am not a economics expert, here are a couple of other things I think would help all homeowners as well as aging homeowners:
1) Double the current exemption for equity gains on a primary residence from $250,000 (single) and $500,000 (couples), to $500,00/$1,000,000 respectively. The bi-partisan legislation to do this is currently pending in Congress. Write to your legislators.
2) Re-instate the portion of the previous tax code (pre-1996) that allowed homeowners to avoid any tax if they rolled-over their equity into a new property (like a 1031 exchange for primary residences). Being able to turn equity into cash for living expenses or investments to generate income, and still roll-over the remaining equity to offset the cost of purchasing a smaller home (or a larger home. Young people with growing families need to move out of their small starter homes and into larger homes), would be a boon to millions of people who cannot afford to move on because the tax bite reduces their ability to purchase another home.
While I have nothing against this idea, as long as it’s voluntary, and with a certain caveat, I don’t see this as getting to the root of the problem. The real problem is government interferance in the housing market. Also, building regulations and restrictions make it impossible for developers to build anything other than luxury housing to make a profit. (L.A. City built some “affordable” housing and, after following all their own regulations and their concept of minimum living conditions, the apartment like condos they built came out at $800,000 a unit; hardly “affordable”.) And property taxes, a wealth tax, contributes greatly to the unafordability of housing, also a government issue. (We don’t really own our homes, do we. We rent them from the government, since if you don’t pay those taxes, the government will take that property.) I’m not saying developers should be allowed to build anywhere or in any way they choose without following certain minimum standards, but we are way beyond what is necessary.
And now let me put on the tin foil hat. Except it’s not. With the increasing Marxist influence in our government, they have made no secret of the fact that the government wants to “densify” our neighborhoods. They want to force us out of our single family homes and into high rise apartment style condos. Probably government owned, although they haven’t admitted that. Yet. In my opinion, they talk about and campaign on affordable housing, while at the same time adding more and more restrictions and regulations on where and how developers are allowed to build (and rent control), creating more unafordability in the housing market. On purpose. So we will except the “densification” of our living spaces.
Oh, the caveat? The single best retirement strategy is to own (aside from taxes) your own home outright, no mortgage, to live out the end of life. That is true affordable housing. If it gets to the point that one is no longer able to live on their own and needs to be in an assisted living situation, that’s different. In most cases, that is typically only the last year or two of life, and not something all older homeowners will face. Some people do enjoy the elder community lifestyle, but personally, I have no intention of leaving my single family home to live in an elder community, unless and until that is no longer an option. And I suspect that Elizebeth Warren and her ilk will not be moving into an elder community any time soon either.