Senior housing and care were identified as one of the top investment categories in the latest “Emerging Trends in Real Estate 2019″ study. Independent living units, assisted living centers, care homes, and long-term care facilities are all part of this sector. So, what is it that is piquing investors’ interest in this sector?
The influence of the Baby Boomers as they age
The Baby Boomers are the largest age bracket in the United States, having been born between 1946 and 1964. By 2035, the number of senior Americans aged 65 and over will have risen to 79.2 million, which will surpass the current supply. By 2025, there will also be 10.2 million people aged 83 and over. The biological clock of the greatest sector of the U.S. population is the first argument that investors are waking up to senior home investing.
The inventory that is getting old
According to a recent survey, 58 percent of all senior housing homes are at least 17 years old, and 32% are over 25 years old. As a result, a large portion of the senior housing stock is outdated in terms of design and consumer preferences. There might also be new laws in place for existing, older homes. As a result, two different opportunities have been created:
- Purchasing older machines and restoring them to working order. This is a straightforward business plan based on the idea of completely updating the aging senior housing stock. The profit comes from purchasing older flats at a low cost and then reviving them at higher rents.
- Building new flats with more modern floorplans and tastes. With so much older inventory in the mix, there’s a clear chance to start from scratch and develop new houses that fit current living standards—and technology.
Senior housing is a distinct niche since it is not entirely influenced by the national economy’s ups and downs. Unlike a yacht marina, which employment losses can harm, senior living care is a constant demand that cannot be decreased (much like healthcare itself). Consequently, this industry is known for performing well even during times of economic or depression—all you have to do is keep providing and paying for senior care, irrespective of where the country’s economy is headed at the time.
The concept of senior housing is not new. It’s not a company like Airbnb, nor is it founded on some novel notion that suddenly faces fierce competition (the imitators). It’s been around for decades and has a proven track record. This provides investors with further assurance that there will be no unanticipated negative consequences. The internet, for example, which has wreaked havoc on the retail and hotel industries, has had no effect on senior living except to make marketing easier.
The senior housing market is well-positioned for population megatrends in the United States and is recession-resistant. Both new buildings and refurbishment of existing stock offer opportunities. It has a lengthy history of success, which has sparked an increased interest.