People are living longer. A lot longer, thanks to advances in medicine and technology. This is going to have a major impact on real estate. Two industries often considered far apart – healthcare and real estate – are indeed more intertwined than most people realize.
Our increased longevity has a lot to do with stem cell research, so let’s start there.
The human body is a collection of over 30 trillion human cells, each of which is derived from a single stem cell. Stem cells have the remarkable ability to replicate and differentiate into the body’s other types of cells – brain, liver, skin and other organs. If that wasn’t impressive enough, stem cells are also the regenerative engine of the body. They help cure disease and extend a person’s lifespan. “They are nature’s perfect repair kit – ready to be mobilized and facilitate repair when needed,” says Dr. Robert Hariri, a stem cell expert.
So why don’t we live forever?
Current theory points to two reasons: First, the human body eventually depletes its reserves of stem cells. Second, stem cells go through various changes (insertions, deletions, mutations) over the course of a person’s life, making them less effective the older a person gets.
Remarkable advances in stem cell research could be changing all of that. Life-ending ailments like cancer, HIV and heart disease could all soon be a thing of the past.
Peter Diamandis, an engineer, physician, entrepreneur and co-author of the New York Times bestseller “Abundance: The Future is Better Than You Think” recently laid out some of the extraordinary medical advances that were made just last year:
- Immunotherapy helped nearly cure patients of certain types of cancer. Doctors removed immune cells from patients, tagged them with “receptor” molecules that target the specific cancer, and then infused the cells back into the body. A staggering 94% of patients with acute lymphoblastic leukemia saw their symptoms disappear entirely. Patients with other blood cancers had response rates greater than 80%.
- A team of Chinese scientists became the first to treat a human patient with an aggressive form of lung cancer with the groundbreaking CRISPR-Cas9 gene-editing technique.
- Harvard stem cell researchers created “insulin producing” cells to cure diabetes in mice.
- Biologists at Osaka University in Japan discovered a way to use a small sample of adult skin to grow the retinas, corneas and lenses that make up the human eye.
- Cell biologists found that systematically removing a category of living, stagnant cells can extend the life of mice by 25%.
And just think – these medical advances are just the result of stem cell research. Advances in other technologies, such as 3D printing, are also poised to help people live longer. Doctors in Spain recently 3D printed and implanted a titanium rib cage into a 54-year-old cancer patient who had lost his sternum and pieces of four ribs when doctors removed a large tumor.
People are already living longer than ever. Medical advances such as these mean that a person’s longevity is likely to increase even more in the years to come.
According to the UN, in 1950, only 1 in 15 people aged 60 or older were 80 or more years old. In 2000, this ratio had increased to 1 in 9. By 2050, it is expected to hit 1 in 5. By 2050, the United States will be home to more than 30 million people aged 80+, compared to 9 million today.
Really cool stuff, right? But you may be wondering what this has to do with real estate….
Simply put: the fact that we’re living longer is going to have tremendous implications for the real estate industry, whether people realize it or not.
The ability to have children later in life may impact where people want to live (and when). People are waiting longer to get married and have children. Between 1970 and 2014, the average age of a first-time mother jumped from 21.4 to 26.3 years old. Some women are waiting much longer to have children; the number ofwomen over 40 having children has doubled since 1990 alone. New fertility drugs have made it easier for older woman to get pregnant later in life, and advances in technology have helped children born through these traditionally high-risk pregnancies less risky.
The ability to have children later in life means young adults aren’t under as much pressure to get married and have children. They can spend some time focusing on their careers first. This will likely influence where a person wants to live, and what types of housing they want. It used to be that people would move to the suburbs in their late 20s, early 30s when it was time to start a family. With people settling down later in life, this may increase demand for apartments in urban areas – particularly cities like San Francisco, Los Angeles and New York that attract young, professional talent.
Demand for traditional family-sized housing may decline. As people live longer, a smaller proportion of their lives will be spent at home with the nuclear family. Most children live at home until they turn 18, give or take a few years. Call it 20, for simplicity’s sake. For the person who lives to 65, this means about 30% of their life is spent living at home with their nuclear family. The proportion drops to 22% for people who live to 90, which will increasingly become the norm. This trend could result in less overall demand for family-sized housing relative to homes designed for singles or couples.
…but demand for multi-generational housing may increase. On the contrary to the point above, demand for multi-generational housing may increase as people live longer and parents begin moving back in with their adult children. As people live longer, there may be an extended period of time where people do not want to live alone (or cannot safely do so), but who are not ready to move into a senior living facility. Call these people who are predominantly independent. This may drive demand for homes that offer an in-law suite for parents to move back in with their children at a later stage in life.
An extended retirement period could affect where people want to (and can afford to) live. Retiring by age 60 is already a thing of the past. As people live longer, healthier lives we suspect to see more people waiting until age 70 or 75 to retire. Some will delay retirement voluntarily; some will be obligated to financially. In any event, if people are living to 100 or 120 years old, they will have a significantly longer post-retirement period than people have today.
There are a number of ways this might affect real estate. On one hand, if people are more physically active in their later years, this may increase demand for walkable, transit-oriented areas. This allows older people to ditch their personal vehicles while retaining easy access to medical care, social and cultural activities, and the other amenities these places tend to offer. However, real estate in walkable areas can be pricy. People will be required to stretch their savings over a longer timeframe as life expectancy increases. This may drive demand for places with a low cost of living, such as urban areas in the Midwest versus more expensive coastal cities.
Homes will need to be designed with accessibility in mind. Only 1% of U.S. housing units have all five of what are known as universal design features: no-step entry, single-floor living, extra-wide doorways and halls, accessible electrical controls and switches, and lever-style door and faucet handles that are easier to grab than knobs. These design features are going to be more important as people live longer.
Forward-thinking real estate investors are starting to design “homes for life,” or homes that incorporate design features that work for both young families as well as ageing adults. For instance, a first-floor bedroom provides the option for one-level living but can also be used as a home office or playroom. Positioning sinks and vanity cabinets lower makes them easier to use by children and people in wheelchairs alike. It is much more cost effective to integrate accessibility into units at the outset rather than trying to retrofit them down the line.
When it comes to discussing the impact of aging Americans on real estate, most industry professionals default to a conversation around downsizing. Sure, some people will want to trade in their McMansions for smaller, more appropriately-sized homes, apartments and condos. But unit size is just the tip of the iceberg. Increased longevity is going to have significantly greater impacts on the real estate industry. This will only accelerate as medical technology improves. Real estate investors who consider these impacts now will be positioned to reap the rewards in short order.