Posted by Damon L. Chavez on Friday, September 30th, 2016 at 8:44am.
September 2016 / RISMedia With an excess of institutional and public capital at the start of 2016, the senior housing market began the year with a slight pause but has now steadied and is poised for long-term growth. Driving the senior houseing market is need-based housing, which includes skilled nursing facilities, asisted living and memory care
The number of U.S. citizens age 65 and older continues to grow at a record pace. According to the U.S. Bureau of the Census, this group numbered 46.2 million in 2014 - the last year for which data is available. They represent 14.5 percent of the U.S. population and are estimated to rise to 98 million by 2060, more than double compared to 2014.
"Given the vast number of seniors in the pipeline, it will be very difficult for senior housing to be overbuilt in the long run," says Paul Aase ,CCIM, partner at Active Senior Concepts in Johns Creek, Ga. "The challenge is that the bulk of the resident growth will not be hot for another 10 to 15 years as the baby boomers start to age."
Most supply is in need-based facilities. While there is also development momentum in independent living facilities, neither markets show an oversupply.
"Skilled nursing in most states requires a certificate of need, which creates a barrier of entry, so that area has not been overbuilt," says Richard Lynn, associate of the National Seniors Housing Group at Marcus & Millichap in Oakbrook Terrace, Ill. "Independent living also hasn't been overbuilt because it is want-based and not need-based. The supply could exceed demand for some period of time, but ultimately the demand will catch up."
Roughly 70 percent of U.S. adults over the age of 65 will need long term care at some point in their lives, according to U.S. Department of Health and Human Services. As baby boomers start to shift from being the caregivers to being the receivers of care, they are expected to demand more amenities from senior housing facilities. Demand for senior housing will continue to be steady with many new, well-structured and capitalized projects coming to market. RE