There is no doubt that the senior housing market is encountering some changes. Despite these changes’ experts agree that market fundamentals remain strong. Population demographics including an age wave that is set to boom in the coming two decades, present an undeniable opportunity for growth.
Recently, the senior housing and care market is looking at historically low occupancy. The last two years were undoubtedly a time of challenge for senior housing owners and operators. Two main factors to this include, a decline in occupancy nationwide, and an ongoing staffing crisis for providers.
The upside to this is that investors, now have the ability to acquire these buildings, skilled nursing facilities, assisted living facilities and independent living facilities, at a relatively low price per bed.
During the three years leading up to the great recession the senior housing market was unprecedentedly strong. This was followed by a three-year lull including 2010, which produced the lowest value per unit despite it representing the year the market began to turn around. The market more than made up for this lag in 2011 when the average price per unit surged by 44{ab00da231405656ab53e236adbc822260719de0342a41ff7a037e7d07eabcb24}.
It took another three years where the average price stayed in a tight range before the next surge in pricing occurred jumping another 27{ab00da231405656ab53e236adbc822260719de0342a41ff7a037e7d07eabcb24}. The abundance of new developments that broke ground in 2014 and 2015 opened their doors in or around 2017 driving a competitive scramble for more than just residents. Not only did this put pressure on unit pricing, it also effected the already scarce labor, resulting in higher labor costs and increased turnover.
Sources:
(2018). SENIORS HOUSING AND HEALTH CARE MERGERS & ACQUISITIONS IN THE 21ST CENTURY (4th ed.). Norwalk, CT: Eleanor B. Meredith.