The senior housing industry has undergone significant growth in recent years for a variety of reasons and now some new data from the U.S. Census Bureau reinforces analysts’ expectations that this growth should continue for the foreseeable future. As this trend continues, senior housing participants who are interested in taking advantage of the market’s strong dynamics via an acquisition or other method should continue to look to Cambridge Realty Capital and the different programs that it offers for their financing needs.
Since the 1970s a growing number of households have been putting capital into their homes because it was generally considered one of the safest investments available, and for many years it was. Unfortunately, the Great Recession, which ended in 2009, significantly reduced home values across the country and because of this, many seniors postponed transitioning into senior housing and decided to live at home or with their adult children instead. Today, partially due to extraordinary stimulus efforts by the Federal Reserve, the U.S. economy is growing again. This growth has helped to stabilize home prices across the country and while their values haven’t returned to what they were previously, they have at least moderated and the steep declines that took place during the recession are no longer occurring. The growing economy and stable home prices have allowed many seniors who postponed moving into senior housing to finally begin that transition. Senior housing providers have attempted to meet the demand caused by this trend by building new facilities and remodeling other real estate properties such as hotels and apartment buildings, into senior living communities. Their efforts have been helped by the Federal Reserve’s monetary policy, which has pushed interest rates to historical lows in recent years. The Federal Reserve is now adjusting its policy by paring back its quantitative easing program which it used to lower long-term interest rates, and once that program has been completely wound down, it will then turn its attention to reducing other stimuli by eventually raising the federal funds rate, which will lead to an increase in short-term interest rates. However, even as rates increase, according to the data that was just released by the U.S. Census Bureau, strong demand for senior housing should continue for years to come.
According to the Bureau’s data, the nation’s 65 and older population is expected to increase by nearly 100% within the next 30 years from 43.1 million in 2012, to 83.7 million in 2050. This increase will have a profound impact on the nation’s businesses, state, local, and federal governments, health care system, and especially the senior housing industry. This was reinforced by Jennifer Ortman, the head of the Census Bureau’s Population Projections Branch who stated in a press release that “Changes in the age structure of the U.S. population will have implications for health care services and providers, national and local policymakers, and businesses seeking to anticipate the influence that this population may have on their services, family structure, and the American landscape.” For senior housing providers this steady increase in the aging of the population means that there will be consistent demand for quality senior housing across various price points. Meanwhile, for senior housing investors this means that the value of senior housing assets should rise as more people transition into seniors housing, occupancy rates increase, and net operating income increases along with it. Providers should consider planning for this demographic shift as early as possible so that they can take advantage of future opportunities for growth when they present themselves. Similarly, investors will also want to prepare to enter the senior housing space or increase any holdings that they already have in it as early as possible in order to maximize the value of their assets. As this demographic shift occurs and demand for senior housing continues to increase, both of these groups should continue to look to Cambridge Realty Capital for the financing options they provide that can facilitate growth, acquisitions, and numerous other wealth generating transactions as well.