The possibility of new building of senior living slowing down has those with a stake in the senior living industry concerned about the future. The beginning of 2018 saw lumber prices up 13% over 2017, the result of the very active and destructive hurricane season, as well as possible tariffs on wood imported from Canada. The labor shortage in many parts of the US hasn’t helped matters. Developers of all types can’t proceed with plans without enough help on the ground.
Now that senior living new builds may become more scarce, it’s possible that even seniors with adequate retirement savings may have a tougher time finding senior housing. It’s a prospect that is troubling to senior living stakeholders of all types, including Cambridge Realty Capital Companies’ Chairman Jeffrey Davis. “We’re watching closely to see what, if anything, the fallout will be in the event that seniors needing housing outpace the ability for builders and existing senior care operators to keep up.”
Davis also believes that labor and building supply costs will make existing facilities more in demand due to excellent locations and lower rental rates.
Even before the disastrous 2017 hurricane season hit the US, senior living advocates and professionals were already concerned about the lack of affordable senior living options in many parts of the US. A significant number of low-income facilities have waiting lists that range from two years to as many as seven. Some seniors in urban areas like New York City have even reported waiting up to a decade for an affordable space to live.
One year before the devastating hurricane season, the Bipartisan Policy Center (BPC) studied the current state of senior care and living and predicted its impact on the future. It detailed its findings in a 96-page report and identified four needs and challenges. The most obvious need was to increase the housing supply, particularly with regard to low-income seniors. Other challenges included making communities more accessible to seniors (so they can age in place longer), integrating healthcare and support services with senior living, and implementing aging-assistive technologies on a wider scale.
The BPC recognized in its report that even if the last three of its identified needs were addressed, there would still be too little senior housing to adequately meet the needs of aging baby boomers. One of the solutions to the housing shortage that it proposed is the creation of a new federal government program for senior supportive housing “that uses project-based rental assistance and low-income housing tax credits to finance new construction and attract funding from healthcare programs.” (https://www.mcknightsseniorliving.com/news/brace-for-a-catastrophic-seniors-housing-shortage-group-warns/article/498275/) It also noted in its report that “affordable housing is the glue that holds everything together.”
Undoubtedly, new threats to the cost of senior living will continue to emerge as time goes on. Davis is glad that the issue is being addressed now by the BPC and other groups while there is still time left to prevent a crisis. In the meantime, Cambridge is still at the forefront of the financing of both new senior housing builds as well as refinancing of existing facilities and facility upgrades.
You can download the BDC’s report, Healthy Aging Begins at Home at http://bipartisanpolicy.org/wp-content/uploads/2016/05/BPC-Healthy-Aging.pdf.