The cost of living in a home in the greater community can easily exceed the cost of living in a senior living community for older adults using even a modest level of home healthcare, according to a new issue brief from the American Seniors Housing Association.
The brief, “The Surprising Price of Staying in a House: Cost Comparisons Often Favor Senior Living,” is an update to a 2017 ASHA analysis comparing the cost of staying in a house versus living in senior living — independent living, assisted living or memory care. The brief was prepared by industry analyst Daniel M. Bernstein, CFA.
Compared with costs in the 2017 brief, the update reveals that home prices are up 22%, rent has increased 45%, food costs are up 31% and home health costs have increased 75%. Senior housing rents, by comparison, are up just over 30%.
Analyzing individual net worth against senior living costs “strongly” suggests that affordability has improved 27% for independent living, 23% for assisted living and 22% for memory care relative to year-end 2017, according to Bernstein.
“Home prices and the cost of home maintenance have risen much faster than the monthly cost of senior housing, making it more economical for seniors to make this move,” Bernstein concluded. “A potential reduction in interest rates should further increase housing prices and boost seniors’ net worth to support seniors housing affordability.”
When prospective residents and their families have “sticker shock” about moving into a senior living community, the brief shows, they are not considering the true costs of owning a home, including property taxes, insurance and home maintenance, as well as home healthcare.
The calculation that most older adults and families use to compare living at home with moving to a senior living community assumes no cost for home healthcare and no rent or mortgage, Bernstein wrote. It also does not consider major home repair costs, investments to make a house safe for someone aging in place, and the companionship and social interactions that a senior living community provides, the brief noted.
Although the cost for an older adult remaining at home, excluding home health, is lower than the cost of any type of senior living community, those cost advantages disappear as soon as any degree of paid home healthcare is added, Bernstein stated. For an older adult requiring significant home healthcare, the cost of living in a house likely exceeds the cost of assisted living and memory care, according to the brief.
The bottom line, according to the brief, is that the cost of living in a house with even a modest level of home healthcare can easily exceed the cost of an independent living community, and it approaches the cost of assisted living. In addition, an older adult living in a house and receiving part-time care does not have the benefit of the companionship and social interaction provided in a senior living community, which has been shown to be beneficial to an older adult’s mental acuity and well-being.
The analysis compared the cost of living in a house without care, living at home with a modest amount of paid care, and living in an independent living, assisted living or memory care community. The brief includes a comparison of senior living costs to a $400,000 house, a $600,000 condominium and a $200,000 condo.
The brief also examines the affordability of senior living through total net worth to the cost of the average length of stay in a senior living community. In addition, the brief covers tax considerations for tax deductible medical expenses as well as the availability of government assistance, including Medicaid waivers and benefits for veterans.
The issue brief is available for purchase in the ASHA bookstore.
