Investment Benefits of Senior Housing - Second in a Series
November 1, 2009
By Jon Meier, Director of Advisory Services
jon@seniorcarerealty.com
In our last article, we touched on the topics we will be discussing in this series on investing in the senior housing industry. In this article, we will focus on the investment benefits of senior housing.
Real estate has taken a hit over the past few years. While the residential market has received the most attention, commercial real estate of all kinds, including senior housing, has been affected as well. So why would someone consider an investment in senior housing?
Senior housing has had its share of up's and down's, but it is becoming a more stable form of real estate investment. Assisted living in particular is a need-driven product and many more consumers are moving to assisted living because of the growing number of the elderly needing assistance with daily activities.
One of the benefits of recent market declines is that some senior housing investments are more affordable today than they were a few years ago. Capitalization rates have increased since 2007, which means that values have decreased. This isn't good news for those who made investments a few years ago, but it provides an excellent entry point for new investors.
The residential market decline has had an effect on new admissions to some degree. Some consumers entering senior housing don't need immediate placement but can select when they move. If they are waiting for their house to sell, the wait could be long. While this has caused some decline in industry occupancy rates, the decline has showed signs of stabilizing.
While many point to "baby-boomers" as the source of boom in the senior housing industry, such enthusiasm may be premature. Baby-boomers are having an impact in the 55+ independent living and active adult communities. With the average age of residents in assisted living around 85, it will still be some time before baby-boomers have a significant impact on occupancy in assisted living. Nevertheless, the 85+ age cohort is among the fastest growing segments of the population in percentage terms and more consumers enter assisted living everyday. The future growth in demand for all segments of senior housing is undeniable, and exciting.
The recent constrains from the credit markets has had negative effects on real estate. But a silver lining may be in the reduced pace of new product development. The inability of many developers to obtain the financing needed to bring new facilities to the market has strengthened the performance of existing facilities.
Real estate investment has many benefits. But there are several benefits that are unique to senior housing:
To learn more about investing in senior housing, contact Senior Care Realty at 877-834-4175 or visit www.seniorcarerealty.com.
November 1, 2009
By Jon Meier, Director of Advisory Services
jon@seniorcarerealty.com
In our last article, we touched on the topics we will be discussing in this series on investing in the senior housing industry. In this article, we will focus on the investment benefits of senior housing.
Real estate has taken a hit over the past few years. While the residential market has received the most attention, commercial real estate of all kinds, including senior housing, has been affected as well. So why would someone consider an investment in senior housing?
Senior housing has had its share of up's and down's, but it is becoming a more stable form of real estate investment. Assisted living in particular is a need-driven product and many more consumers are moving to assisted living because of the growing number of the elderly needing assistance with daily activities.
One of the benefits of recent market declines is that some senior housing investments are more affordable today than they were a few years ago. Capitalization rates have increased since 2007, which means that values have decreased. This isn't good news for those who made investments a few years ago, but it provides an excellent entry point for new investors.
The residential market decline has had an effect on new admissions to some degree. Some consumers entering senior housing don't need immediate placement but can select when they move. If they are waiting for their house to sell, the wait could be long. While this has caused some decline in industry occupancy rates, the decline has showed signs of stabilizing.
While many point to "baby-boomers" as the source of boom in the senior housing industry, such enthusiasm may be premature. Baby-boomers are having an impact in the 55+ independent living and active adult communities. With the average age of residents in assisted living around 85, it will still be some time before baby-boomers have a significant impact on occupancy in assisted living. Nevertheless, the 85+ age cohort is among the fastest growing segments of the population in percentage terms and more consumers enter assisted living everyday. The future growth in demand for all segments of senior housing is undeniable, and exciting.
The recent constrains from the credit markets has had negative effects on real estate. But a silver lining may be in the reduced pace of new product development. The inability of many developers to obtain the financing needed to bring new facilities to the market has strengthened the performance of existing facilities.
Real estate investment has many benefits. But there are several benefits that are unique to senior housing:
- A stable real estate product that is needed by many consumers
- emographic shifts that will help enhance long-term value
- Supply constraints in the short-term should boost yields
To learn more about investing in senior housing, contact Senior Care Realty at 877-834-4175 or visit www.seniorcarerealty.com.
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