The Active Process of Aging in Place

by Jen Molinsky
Research Associate

America’s older population is poised for unprecedented growth. The youngest members of the baby boom population, born 1946-1964, have turned 50, while the oldest boomers have crossed the 65 threshold. Growth among 65-74 year olds is set to soar, climbing from 22 million in 2010 to an estimated 39 million by 2030, a 78 percent jump. By 2040, there will be an estimated 30 million 75-84 year olds, and another 14 million people 85 or over.

The vast majority of older adults currently live independently. This is true even among the oldest group: of those aged 85 and above, 72 percent live by themselves or with a spouse/partner in their own homes, according to the 2012 American Community Survey. With evidence that Americans of all ages are moving less, and given health care improvements that have delayed moves to institutional care, the trend toward independent living in older age is very likely to continue.

Indeed, surveys show that most people want to live independently in their current homes and communities as they age—a preference popularly called “aging in place.” In a 2010 survey of 1,600 people over aged 45, AARP found that 86 percent somewhat or strongly agreed with the statement “What I’d really like to do is stay in my current residence for as long as possible,” while 85 percent somewhat or strongly agreed “What I’d really like to do is remain in my local community for as long as possible.” A 2014 online poll by the American Planning Association found that 69 percent of 50-65 year old respondents with at least two years of college reported that staying in their homes as they got older was somewhat, very, or extremely important.

The Center for Disease Control defines aging in place as “the ability to live in one’s own home and community safely, independently, and comfortably, regardless of age, income, or ability level.” The CDC’s focus on aging in place as an “ability” is on point: because abilities may change over time, the definition hints at the dynamic nature of aging in place, rather than the absence of action and change regarding one’s living environment. The reality is that, for many, aging in place is a deliberate and dynamic process, one best undertaken with preparation including adaptations of physical space, modes of transportation, or other facets of life in advance of physical or cognitive need to do so. For some, it may even involve moving in order to set the stage to live independently for as long as possible, relocating to a new home that is more comfortable, safe, affordable, and/or convenient. Moves may be within the current community – preserving existing social connections – or outside to locations where changing needs can be better accommodated either because of more community resources or proximity to family.

And even with preparation, aging in place is an ongoing process (as literature from the field of gerontology recognizes) in which older residents renegotiate how, and indeed if, they continue to stay in their current home as their preferences and circumstances (health, finances, relationships and family and social supports) shift over time.

The CDC mentions the ability to remain in one’s community as well, and indeed a critical part of aging in place is the setting in which it occurs. Many researchers, advocates, and commentators point to the same list of elements needed to make communities more livable for all ages, including older adults: affordable, secure, and physically accessible housing; and affordable, safe, and reliable transportation alternatives for those who are unable or choose not to drive (such as mass transit, paratransit, and safe and desirable walking routes to services and amenities). Opportunities for older residents to engage with their communities in recreational, learning, cultural, volunteering, and/or social experiences, and options for in-home health care and/or assistance with activities of daily life as circumstances change are also critical.

Yet there are tremendous challenges in ensuring that our houses and communities are ready to support a high quality of life for older adults aging in place now, and the growing numbers of those who will do so in the future. Needs include more accessible housing units for those with ambulatory difficulties; a larger range of housing options for those seeking smaller, more affordable units; improved infrastructure to promote pedestrian safety; transportation alternatives to private cars;  and local services to assist older adults with home maintenance, care, and meals. The federal government has a role too, in providing financing options to help homeowners and renters modify their homes to improve safety and accessibility, supporting the growing number of low-income senior renters, and in improving collaboration between health and housing programs to ensure they are mutually supportive of aging in place.

There is much to be done to provide the needed supports for today’s older population and the coming waves of older adults engaged in the dynamic process of aging in place. A first step is for individuals to recognize the value of planning in anticipation of future needs, and for government at all levels to recognize the magnitude and importance of the challenges and opportunities associated with an aging population seeking to age in their communities. The next step is to take stock of what we already know about the best way to support aging in place and to consider how the public, nonprofit, and private sectors can innovate and bring solutions to scale. 

To help spur and inform this important discussion, the Joint Center for Housing Studies and the AARP Foundation will release a comprehensive report on this topic this fall. Housing America's Older Adults: Meeting the Needs of an Aging Population will be released at an event in Washington, DC on September 2, 2014.  Join our mailing list to receive more information this summer.

Watch our Gateway Cities Summit on YouTube

If you missed our recent event at Harvard Graduate School of Design, Opening the Gates of Opportunity: Realizing the Potential of Gateway Cities in Massachusetts, you can now watch the full event on YouTube.

Gateway Cities are midsize urban centers in Massachusetts facing stubborn social and economic challenges, but with many assets that have unrealized potential. Our half-day event brought together community leaders, public officials, policymakers, faculty and students (agenda) to exchange ideas and information about workable solutions for these cities and local economies. Through these discussions, we captured innovative, cross-sector, collaborative ideas and models that we hope will feed into the work that is being done by students and faculty in urban planning.

We want to thank all of the speakers, panelists, students, and sponsors who made our event such a success.

The video is available in three sections:

Part 1:  Welcome & Keynote
Part 2:  Goals, Challenges, and Who Are We Trying to Help?
Part 3:  How Do We Get it Done? Tough Choices, Which Places, and Why?

Download the Agenda from the event

How Can Remodeling Companies Achieve the Benefits of Scale?

by Abbe Will
Research Analyst
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The residential remodeling industry faces many obstacles to scale economies, including low barriers to entry, volatile business cycles, highly customized work, and difficulty attracting capital. For this reason, the industry continues to be highly fragmented, with the vast majority of remodeling companies operating as relatively small, single-location businesses that likely will not experience any significant growth over their life-cycles. According to data from the U.S. Census Bureau, the average size of remodeling contractors with payrolls, in terms of annual revenue, is significantly smaller than in other major sectors of the economy: about one-third the size of firms in the broader construction sector, one-fifth the size of retailers and about one-tenth the size of wood product manufacturers (Figure 1). Indeed, residential remodeling contractors are even smaller in scale than the typical business in the fractured restaurant and hospitality industry.

Notes: Depending on the sector, average size is calculated using employer value of sales, shipments, receipts, revenue or business done. * FIRE denotes the finance, insurance and real estate sectors. Building material dealers are a subsector of the broader retail trade sector. Residential remodeling contractors are defined as general and special trade establishments with more than 50% of receipts from remodeling activity including maintenance and repair, and are a subset of the overall construction sector. Source: JCHS tabulations of published and unpublished data from the U.S. Census Bureau’s 2007 Economic Census of Construction.

Yet, evidence suggests that remodeling firms able to overcome these obstacles enjoy significant benefits from scale. Better understanding of the ways in which remodeling companies are overcoming the many hurdles to scale, as well as how industry manufacturers, distributors, and franchisors are supporting scaling and consolidation efforts within the industry, can provide insight into how the industry is likely to continue evolving over the next several decades.

My new Joint Center working paper documents key findings on this topic gleaned from in-depth interviews with dozens of industry leaders who have either successfully established larger-scale companies or are otherwise supporting scaling and consolidation efforts within the industry. A few key themes emerged:

Specialty Remodeling Businesses are Generally Easier to Scale than Full-Service Firms

Most of the largest remodeling companies today are specialty firms: replacement roofing, siding, windows, doors, flooring, or painting businesses, for example. Specialization allows companies to develop greater efficiencies in their operations and obtain more favorable pricing on materials compared to full-service remodeling firms. Specialty projects also tend to be relatively straightforward and less labor intensive for scheduling and installation, which means shorter job cycles and higher margins. Specialty firms have been pursuing scale in the remodeling industry by heavily focusing on corporate sales and marketing strategies and by integrating vertically (i.e. the company owns the supply chain).

Manufacturers & Distributors are Playing a Significant Role in Supporting Contractor Scaling

Manufacturers and distributors, including retailers, arguably have the greatest motivation and investment capabilities for influencing scaling and consolidation in the industry through their installed sales and preferred contractor programs. Such programs encourage further specialization of remodelers and offer training and expertise in professional marketing, sales, installation, and business systems to help contractors improve their operations. Installed sales and preferred contractor programs push industry standards by requiring licensing, insurance, minimum years in business, and good business and customer satisfaction practices of participating contractors. Manufacturers and big box retailers will surely continue to leverage their national trust and brand recognition to further expand installation services to consumers, though it is unclear whether they will move further into this space through in-house expansion or through acquisition of established contractor companies. Either way, manufacturers and distributors will likely be a formidable force behind ongoing consolidation in the industry.

Franchising and Licensing are Proven Strategies for Growing a Remodeling Business 

Franchising, licensing, and similar business models have already been successful strategies for growing a remodeling business toward a national presence. Such models allow a business to quickly expand its brand recognition and market reach without investing significant capital in acquiring new locations or managing each independently-owned and operated franchise, dealer, or affiliate. Through such agreements, franchisee companies gain a recognized brand name, proven business systems, training and marketing support, and access to a peer network of other franchisees for best practices advice. Overall, franchising and related efforts in the remodeling industry tend to be more successful with specialty businesses because of their streamlined operations. Also, since installation is relatively simple and systematic, specialty firms tend to focus strongly on sales and marketing for achieving scale.

The home remodeling industry will likely always include some amount of fragmentation due to low barriers to entry and other challenges to scale. While the industry may never reach the same level of concentration as other industries in the broader construction sector, the sheer size of the home remodeling market—which the Joint Center estimates at $300 billion annually—and its continued fragmentation present major opportunities for companies that are organized, differentiated, and focused on brand-building.

Favorable Financing Costs Not Impacting Remodeling Activity During Recovery

by Abbe Will
Research Analyst
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Solid growth is expected in the home remodeling market this year, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Joint Center. While annual growth is expected to decelerate some by the fourth quarter due partly to the ongoing sluggishness in home sales, home improvement spending is still expected to grow nine percent in 2014. In the near term, lower rates of household mobility and lean inventory levels of homes on the market seem to be helping the home improvement industry. That coupled with an aging housing stock and deferred expenditures during the recession have owners catching up with delayed remodeling projects this year. Another factor that would normally help boost remodeling spending is low financing costs, but as described below historically low interest rates are not having the same impact on home improvements in current market conditions.

Produced by the Remodeling Futures Program since 2007, the LIRA is a short-term indicator of national trends in home improvement spending. The LIRA is calculated as a weighted average of the annual rates-of-change of its component inputs, which are various economic measures that historically have had strong correlations and leads over remodeling activity. With the release of the First Quarter 2014 LIRA today, a decision was made to change the estimation model by removing the financial market conditions input (as measured by long-term interest rates), because the traditional relationship between interest rates and home improvement spending has significantly deteriorated in recent years. As seen in Figure 1, the impact of this change is slightly lower rates of growth in annual home improvement spending estimated for the past several quarters and substantially higher rates of growth projected for the next three quarters. Under the original LIRA estimation model, homeowner expenditures on remodeling projects are projected to increase about three percent in 2014, while the revised model projects spending will increase nine percent this year.

Note: The revised LIRA model excludes 30-year Treasury bond yields as an input and reweights the remaining inputs proportionally.  Source: Joint Center for Housing Studies of Harvard University.  

Major changes to the LIRA estimation model have not been common. The last significant change occurred in 2008 when the LIRA was re-benchmarked from the Census Bureau’s Residential Improvements and Repairs Statistics (C-50) to the Construction Spending Value Put in Place (C-30). The reason for changing the LIRA model at this time is because since 2008, the severe housing and the mortgage market crash and subsequent Great Recession has caused unprecedented volatility in many of the LIRA inputs including the financing measure represented by 30-year Treasury bond yields. The theory behind including a financing measure in the LIRA model is that under more normal housing and economic environments, large home improvement projects are often financed by homeowners through home equity loans or lines of credit or cash-out refinancing of mortgages, and so the historically low financing costs of recent years would ordinarily encourage significant remodeling activity.  Yet under the current conditions of a stalled housing market and still lukewarm economic environment, homeowners have not been able to take advantage of historically low financing costs because of much reduced levels of equity in their homes since the housing crash, as well as tighter lending practices of banks. For these reasons, the historically low interest rates of the past two years did not have the same influence on remodeling activity as in the past. Since the fall in rates did not result in a jump in spending, the recent rise in rates are also not expected to have as much of a chilling effect on remodeling spending as in the past. 

Indeed, as shown in Figure 2, the relationship between the annual rates of change in home improvement spending and 30-year Treasury bond yields was fairly strong when the LIRA estimation model was last updated in mid-2008 with a correlation coefficient of 0.7 between 2000 and 2007 (remodeling spending and interest rates are inversely correlated so that when interest rates increase spending declines and vice versa). While long-term interest rates are historically quite stable, since the housing and mortgage market crisis interest rate changes became unusually volatile as interest rates fell to historic lows and again as rates move off of these lows. Not only have interest rate movements become much more volatile, but the direction of change no longer correlates well with remodeling spending. When including data from the more recent period that covers the downturn and recovery, the correlation coefficient between remodeling spending and long-term interest rates weakens considerably to 0.2 and in fact there is essentially no correlation between the two series after 2008. If the traditional relationship between financing costs and remodeling activity were still intact, much stronger growth in home improvement spending should have occurred when interest rates fell to historic lows in the aftermath of the housing crash, and now as interest rates return to their longer-term trend remodeling activity would be expected to decline considerably. Yet remodeling spending has seen relatively low and stable growth in the years following the downturn.

Note: The rate of change in Treasury bond yields are plotted inversely and with a four-quarter lead
Source: JCHS tabulations of Census Bureau’s C-30 and Federal Reserve Board 30 Year Treasury Bond Yields.

Given the increased volatility in the C-30 benchmark data series and the LIRA inputs in recent years as the housing and home improvement markets have undergone severe cyclical downturns and sluggish recoveries, there is clearly a need for further testing of the LIRA estimation model moving forward to improve its stability. Each year on July 1st, the Census Bureau releases annual revisions to the C-30 for the prior two years, which provides a good opportunity for re-running LIRA input correlations and testing for further additions or substitutions of input variables that historically correlate well with remodeling spending, have strong leads over spending, and are also relatively stable over time. Any further changes to the LIRA model will be announced with the next quarterly release on July 24, 2014. For more information about the LIRA methodology and frequently asked questions (FAQs), please see the Joint Center for Housing Studies website.

Employment and Gateway Cities

by David Luberoff
Guest Blogger

From time to time, Housing Perspectives features posts by guest bloggers. Today's post was written by David Luberoff, senior project advisor to the Boston Area Research Initiative at Harvard’s Radcliffe Institute for Advanced Study.  David will be a panelist at an upcoming Joint Center for Housing Studies event, Opening the Gates of Opportunity: Realizing the Potential of Gateway Cities, taking place at Harvard on Friday, April 18.  More information about the event is below.


Historically, the gateway cities of Massachusetts have been important regional economic centers, drawing workers each day from neighboring cities and towns.  However, today many gateway cities attract fewer employees from surrounding communities while many residents of those cities travel to suburban jobs, according to data from the Census Bureau’s 2006-to-2010 American Community Surveys (ACS).

Lawrence, Massachusetts

As the table below shows, eight of the state’s ten most populous cities are gateway cities, which are defined as midsized urban areas where average household income and rates of Bachelor degree attainment are below the state average.  (The exceptions are Boston and Cambridge).  But only five gateway cities – Worcester, Springfield, Quincy, New Bedford, and Lowell – are on the top ten list of where jobs are located. The three gateway cities on the top ten list for population – Brockton, Lynn, and Fall River – are replaced on the top ten list for jobs by Waltham, Newton, and Framingham.

Even more striking, among the large gateway cities, Springfield and Worcester are the only places where the number of non-residents coming into the city to go to work exceeds the number of people leaving to work in other locales.  This doesn’t mean that no one commutes into gateway cities.  In general, however, the share of jobs held by local residents is higher in gateway cities (with the notable exception of Quincy).  Additionally, residents of gateway cities farther from metro Boston seem more likely to live and work in the same locale.

Consider, for example, patterns in Lawrence.  According to other data from the ACS, about 7,904 of the about 30,052 Lawrence residents who are workers have jobs in that city.  Another 2,665 work in Methuen, while between 800 and 1,200 work in Boston, Haverhill, Woburn, Andover, Danvers, and Wilmington. Of workers coming into Lawrence from other communities, 2,420 come from Methuen, 1,650 from Haverhill, and 860 from Lowell.  No other locality sends more than 350 people.  It’s also worth noting that more workers commute from Lawrence to nearby Andover (which has more than 30,000 jobs) than from any other locality, including Andover. (Click table to enlarge.)

Source: Commuter Adjusted Daytime Population: 2006-2010 5-year ACS

These data suggest that policies designed to strengthen gateway cities should seek opportunities to make those localities more attractive to firms that draw employees from both the city and surrounding communities.  At the same time, policymakers should seek opportunities to better connect residents of the state’s gateway cities with jobs in suburban locales as well.

These and other challenges and opportunities of gateway cities will be discussed at a half-day event taking place at the Harvard Graduate School of Design next Friday, April 18^th. Opening the Gates of Opportunity: Realizing the Potential of Gateway Cities is free and open to the public, but advance registration is required. Please register to attend or watch the live webcast on the Joint Center website (no registration required for the webcast).