Builders betting boomers will occupy senior housing
Monday, September 28, 2015
If you play the numbers, the numbers are promising. Every day 10,000 baby boomers are turning 65 and, according to the U.S. Census Bureau, they will continue to do so until 2030. When the last of the boomers hits the magic number, the first wave will already be in their 80s.
Even accounting for those who plan to age in place in their current homes well into retirement, that translates into tens of millions of seniors who will need housing and care facilities. Builders are already betting that many of them will eventually migrate to senior living facilities and communities.
The question nagging the industry at the moment is, if you build it, will they come?
After a post-recession lull, senior housing construction has been on the rise for the past several years. Do a search on Google News, and you will find dozens of articles about new senior living facilities that have recently opened or are in the process of planning and development.
The most recent list of senior housing construction projects in the pipeline compiled by the Red Capital Group includes major developments in Kentucky, Florida, Minnesota, Washington, Illinois and California. According to a report released earlier this month from Auction.com, housing transactions among the senior cohort is climbing toward pre-recession peak numbers, with deal volume in senior housing increasing 60 percent over the past year.
In a survey of 182 industry experts conducted by the National Real Estate Investor and the National Investment Center for Seniors Housing and Care, 69 percent said they expect construction starts to increase in the next 12 months across the country.
It's a certainty that boomers will age and will have different housing and care needs in the future. What types of living arrangements they will gravitate toward is still in question. The Auction.com report notes, "There are concerns that this building spree to meet the rising demand for senior housing may lead to an oversupply, because it is unclear of what kind of housing this group will need or at what time they will need it."
Two-thirds of the experts who participated in the NREI/NIC survey, however, believe that even with all the new construction, occupancy rates will improve or stay the same.
Boomers as a group are healthier and more health conscious than previous generations. Numerous surveys show many will want to live independently for as long as possible. If and when they make the move to a senior living facility or community, they will want to maintain their active lifestyle.
Already across the country, existing and new facilities are being upgraded to provide more attractive living spaces, better quality and variety of food, and a robust menu of amenities, including active wellness programs, group activities, and laundry and housekeeping services.
Another trend, as reported by Senior Housing News, are age-restricted (55-plus) housing communities. These offer a more affordable option for seniors who want the convenience of socializing with their peers but not all the extras that come with a luxury senior living community.
"Senior housing has been catering to the top 2 percent of baby boomers," industry veteran Cecil Rinker said. "The 55-plus market is helping an underserved population. This is truly independent living for people who don't need services or want services."
The National Association of Home Builders says builders are optimistic about the 55-plus market. Its 55+ Housing Market Index (HMI) for the second quarter of this year registered 50, the fifth consecutive quarter with a reading at or above 50 (positive territory). Perhaps an indication of near-term trends, it noted that builder sentiment was particularly positive for the condo market.
At the same, the number of multigenerational households has been increasing. A study from the Pew Research Center last year found the number of multigenerational family households had doubled between 1980 and 2012, comprising 57 million Americans or 18 percent of the population.
A recent broadcast on American Public Media's "Marketplace Morning Report" discussed a trend among lower- and middle-class families in which children are moving in with their parents, or vice versa, in order to be able to afford their mortgage payments.
But the trend is not just among lower-income families. The American Institute of Architects Home Design Trends Survey finds growing demand for age-friendly and accessible homes for owners planning to age-in-place or to care for an aging parent or relative.
Boomers will have a variety of housing options to choose from as they age. And the industry may well introduce others as lifestyles, affordability and healthcare needs develop over the next couple of decades. Whether they will embrace the projects already in development is anyone's guess. Given boomers' track record for transforming institutions at each life stage, the one thing builders can count on is that whatever they are offered, boomers will want change.
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