Why Senior Housing Would Boom in the Coming Years?
Did you know that 10,000 Baby Boomers are turning 65 every day? They take up 13% of the population. In the next five years, the U.S population with age 75 above will grow by 5 million. This is a 21% increase in the number of current senior housing residents. The statistics given are based on Marcus & Millichap’s First Half 2019 National Seniors Housing Report. With this report, experts expect that Senior Housing demand will boom in the coming years.
Aside from the population growth, there is also a slowdown in the construction of new senior housing. This is because of stricter lending and high construction costs. When the interest rate increased in late 2018, the number of investments in senior housing lowered in the first quarter of 2019. The market forces, demographic changes, and growing senior population add fuel to the senior housing demand.
Who are the Baby Boomers?
The baby boomer’s generation is the second largest generation in the United States. With Millennials on the first spot. They are the people born between 1946 and 1964. Between 1956 and 1960, 21.2 million boomers were born. That is nearly 1.5 times the number born between 1941 and 1945. This is the largest for any 5-year period in the 20th century.
Generally, boomers enjoy higher standard of living than their parents. Boomers came of age with the rise of consumerism in the marketplace. They are often associated with the hippie, counter-culture movement of the 1960’s and 70’s although many harbor more conservative beliefs than their children. While boomers constitute the largest percentage of the American workforce, approximately 10,000 retire every day.
What is a Senior Housing?
Senior housing is one of the ways to invest in real estate. Senior housing, also referred to as retirement homes, are housing designated for seniors. There are several types of senior housing:
- Independent living that does not require special services – This is where seniors can take care of themselves and do not need assistance with daily tasks like getting dressed, taking a bath, and medicine. It is like a dorm-style or mini-college campuses where seniors live together and socialize with each other. This is perfect for older adults who do not want to live alone.
- Assisted Living – The community set-up in this type of senior housing is the same as the first one, but they also offer personal care assistance to the seniors. This is ideal for older adults who are somehow active but needs help with daily tasks. To obtain state licensing in this type, there are some regulations required.
- Memory Care – It is a long-term care solution for older adults living with memory loss, including Alzheimer’s and other forms of dementia. The seniors living in memory care need monitoring. State licensing is also required in this type.
- Skilled Nursing – This type of senior housing is also referred to as a nursing home. This is where some skilled nurses and doctors provide services and medical care to the seniors 24-hour. In this type of senior housing, federal licensing is required.
What is the cost of senior living?
Let us set assisted living as an example. On average, the assisted living’s cost ranges from $3,500-$4,500 per month with all utilities paid. 3 meals per day, snacks, and other food are also provided. Besides, they also cover housekeeping, laundry, and assisted daily living.
Predictions on Senior Housing Demand
A Surge in Home Health Care Industry
Aside from the growth in the senior population, home care can be an ideal alternative for seniors especially to those who do not need assistance. It is a cheaper option than letting a senior stay alone in his/her home. Over the coming decade, The Bureau of Labor Statistics predicts job growth of 70% for home, health, and personal care aides over the next years.
A member from the Assisted Living Federation of America concluded that increasingly, people are not viewing senior living as a step on the way to higher-acuity care. But rather as somewhere to age in place. More seniors now are willing to enter senior housing.
Improved Amenities and Technologies in Senior Housing
As mentioned above, the costs of building new senior living options are high. Therefore, most senior housing has started adding and offering new amenities to attract potential residents. As we advance as a civilization, we have developed better technology that allows us to survive easily. Over the last decade, technology in senior housing has improved. There are already phone applications that can remind seniors to take their medicines and GPS systems that help them locate a senior. As the senior housing demand increases, companies are also working to improve daily senior care.
Competition in Senior Housing Industry
The competition in the senior housing demand and industry does not lie in the number of senior homes. Rather, on the overall care provided to the residents. Fewer senior care facilities offer better opportunities for investors. Especially during these times of the pandemic, investors continue to weigh their options.
DISCLAIMER:
DUE TO THE FINANCIAL SOPHISTICATION OF THE PERSONS TO WHOM THIS OFFERING CIRCULAR IS DIRECTED, THIS OFFERING CIRCULAR SETS FORTH LIMITED INFORMATION MATERIAL TO EVALUATING THE MERITS OF AN INVESTMENT. PROSPECTIVE INVESTORS ARE STRONGLY URGED TO CONSULT WITH THEIR OWN ADVISORS PRIOR TO DECIDING WHETHER TO INVEST.
Neither Alpesh Parmar nor Wealth Matters associated claim to be an expert in tax, legal, or insurance strategies. Please consult an expert or advisor.