Recently released statistics indicate that the cost of senior housing has not risen along with general inflation rates. “Right now, the senior housing marketplace is enjoying fairly stable rates,” noted Cambridge Realty Capital President Jeffrey Davis. While housing prices in almost every other category have increased, senior housing is about the same as it was two years ago.
Senior housing occupancy rates are currently low, which is one factor that drives prices down. And one of the reasons that occupancy is low is due to robust development. “Senior living developers are anticipating a greater need for senior housing of all types in the next several years due to the aging baby-boom population,” Davis stated. However, the wave hasn’t quite crested yet, which means some facilities in certain locations are not currently at capacity.
Seniors who are just beginning to contemplate the next stage of their life may want to consider transitioning sooner rather than later. Selling a home now while housing prices are stable and senior housing prices are lower will maximize the proceeds of a home sale and stretch them further into the future.
Once the baby boom wave crests, occupancy will be at capacity, and many facilities may even have waiting lists. This may lead to an increase in pricing, which is why jumping in now instead of waiting may make financial sense for some seniors, particularly those who have a lot of equity in their mortgage, are mortgage-free, or own a home in an area where property values are up.
Building in preparation to accommodate the upcoming baby boom wave crest has been ongoing for several years now and will continue as the crest approaches. This preparatory development is likely playing a role in the current low senior housing occupancy rates across the US (although the overall rate of occupancy varies from state to state and city to city). This, too, may play favorably for seniors who are “on the fence” as to whether or not to make the transition to some type of senior housing. Senior living developers and operators are employing creative and innovative ways to compete in the marketplace, across all housing categories and price points, which is another reason that seniors should consider making the transition. “There are a lot of choices right now,” says Davis, with more flexibility to choose a living situation that aligns with one’s personal values, such as living in a “green,” carbon-neutral facility. “There will be fewer of these choices available to seniors as occupancy rates rise, as we expect to see in the coming years.”
Meanwhile, Cambridge reports optimism amongst its clients, including builders, operators, and lenders. “We are experiencing a vibrant, dynamic marketplace. Our clients are enthusiastic about both the current economy and the future of senior housing.”