Despite the substantial increase of the elderly population in Korea, welfare policies such as housing programs have not been developed enough to meet the diverse needs of the aging people. Particularly, caring for elderly dementia patients is becoming a serious social problem in Korean society. Families are still primarily responsible for taking care of the elderly dementia patients, and thus are suffering from tremendous caregiving burdens. In many Western countries, group homes, which are small-scale care facilities with home-like atmosphere, have become common housing alternatives for elderly dementia patients. Group homes effectively create a therapeutic environment while helping reduce the elder care burdens for the families. This article proposes to review group homes as a housing option for the elderly with dementia in Korea. The purpose of this article is to make suggestions for housing policies, separately or as a part of more general welfare policies. Based on the questionnaire survey conducted on 912 persons currently residing in Seoul and five different provinces, various possible policies and suggestions to promote establishing group homes and other facilities for elderly dementia patients are discussed in this article.