By Jack Cumming

This is the third article in a series about age-segregated living. Opportunity Beyond Age Segregation was the first in the series. Followed by Family Village Living: Opportunity Beyond Age Segregation.

In the first two articles on this topic, we’ve considered how senior living specifically and American living, in general, might change if we move beyond age-restriction in housing. Housing is a capital hungry business. So, disrupting housing doesn’t lend itself to the kind of bootstrap disruption that we associate with Jeff Bezos and Amazon, Bill Gates and Microsoft, or Mark Zuckerberg and Facebook. What industries might have access to the needed capital and stand to benefit from acting as a disrupter?


The first industry to consider, naturally, is that senior housing might disrupt itself by removing age-restrictions and giving up the allure of age-restriction as a justification for tax exemption. The benefits would be a vastly extended market reach and access to the equity capital markets.

Such self-disruption seems unlikely. The supposed plight of old age allows tax exemption and operators like the status quo. Moreover, senior housing has never been able to decide whether it’s a hospitality or a healthcare industry. Of course, Family Village Living – a home among neighbors integrated with services supportive of 21st-century lifestyles – can be both hospitality and healthcare and even more. That’s the big opportunity and the big attraction.

Cruise Lines as Disrupters

Setting self-disruption aside, the cruising industry leaps to mind. COVID-19 has destroyed the cruise industry’s revenue. It’s apparent that simple survival would be enhanced by diversifying revenue streams beyond ships at sea. Moreover, ships at sea are fully self-contained living environments, which of necessity take the senior housing model to a more inclusive level. And, cruising is fun. Already, cruising has disrupted the resort industry, and it has the potential to disrupt housing in general.

The Hotel Industry

The hotel industry, which has had to counter the impact of cruising on its resort business, also has access to capital sufficient to disrupt housing. It’s unlikely that will happen though. The hoteliers dipped into senior living at one time but pulled back due to the vulnerability of those served. That vulnerability brought with it the danger of lawsuits and adverse publicity, and the hotel chains feared the damage to their brands that might result.

Would the hotels consider moving into longer-term housing in general to supplement the transient housing in which they have specialized? The major hotel chains seem content with what they have. Hoteliers do shift their marketing, e.g., all-inclusive resorts, they try to develop specialized brands, and they’ve tried to grow by segmenting the market. That seems to be where it ends, though.

Multi-Family Developers

Might the multi-family industry disrupt itself by embracing the all-inclusive concept into a new housing model that might catch on and change living preferences? That hasn’t happened recently. Del Webb did develop an innovative model for age-restricted active living, and the Villages of Florida have taken that to a new level. Still, that concept ignores the attraction of services like childcare or congregate work and living settings for younger people. And I know of no pilot that could give us an indication of how that more age-extended living model might fare with a younger, environmentally-conscious, work-focused generation.

Life Insurers

Few industries have the capital resources that life insurance companies have at their disposal, and at one time it was thought that insurance companies might be the primary beneficiaries of the market for age-segregated housing offering guaranteed lifetime benefits. After some early forays into the market though, the insurers retreated because actuarially sound projects could not compete with the nonprofits’ use of entry fees to sustain low fees in the early years of a project.


Like much of the senior housing industry, universities have become dependent on tax exemption. Just as that dependence inhibits senior housing from self-disruption, universities are similarly inhibited from diversifying into co-located housing projects, as attractive as that might be. The tax exemption of financially wealthy universities with large endowments is shaky by itself. It is risky for universities to move into new business sectors. Already the universities are struggling to justify their quasi-professional athletic teams as a source of ancillary business income. Hence, while university adjacency is popular with prospects for age-restricted housing, the universities are unlikely to enter the larger housing industry themselves.

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Healthcare Providers

Might a healthcare behemoth like Kaiser Permanente have the entrepreneurial impetus to create a new model for living that incorporates healthcare? The incentive would be to bring down the cost of healthcare that has bedeviled the American economy. The concept would be that relationship medicine – including innovative sick childcare and eldercare – could give us a better quality of health at a lower cost. The best of the Programs of All-Inclusive Care for the Elderly (PACE) are indicative of how relationship medicine improves outcomes while lowering costs. Yet, no one likes to concede that they need a caregiver. So the market is unlikely to embrace the idea of a medical enterprise as a housing provider.


From the above, it’s clear that the barriers to disruption are high. The risks of market failure for a disrupting business model are high. It seems most probable that senior living will continue on its current trajectory, slowly losing its share of the market among those over age 65, but comfortable with its current offerings. Lest we become too complacent and too comfortable, however, we have to consider emerging new models for housing.

OLLIE is finding success with developer partners, and its co-living concept is increasingly popular. Might it emerge as the long-expected, but never arriving, senior living disrupter? Might age-restriction be eliminated as a desirable legal and market restriction for senior living communities? Only time will tell, but the possibility is tantalizing and one that cannot be ignored.

Age segregation is legalized under a 1988 amendment to the Fair Housing Act of 1968. Moreover, age segregation is incentivized by IRS Revenue Ruling 72-124, which grants age-segregated communities tax exemption because age “as a class” is “distressing.”

There may have been some truth to that in 1972 when the Ruling was promulgated but, today, we might consider such a view to be ageist. Most people I know who are eligible for age-restricted living don’t view themselves as “distressed.” Now we view such a premise as somewhat patronizing and even condescending. Culture changes as circumstances evolve and the longevity revolution has brought with it new vitality into what we then thought of as old age.