How Has the Recession Affected Senior Housing?
Although perhaps one of the most resilient segments of the housing market, senior housing has also been affected to varying degrees by the economic downturn. Single-family home prices, one of the key components in providing additional assets to seniors for relocating to senior housing products, have declined in most markets. Although home prices are now beginning to stabilize and many seniors have significant equity in their homes, the drop in home prices from their record highs two years earlier has left some seniors concerned about their ability to fund alternative housing options.
For many seniors, the price declines in most markets have ranged from about 10% to 20%, but remaining values should still be sufficient to support a move to alternative housing.
Another situation is that many seniors with investments also experienced value declines in their portfolios which has caused concern among seniors that their current holdings may be insufficient to fund their full retirement.
If the need for services is not critical, seniors are generally delaying their relocation for as long as possible. This has been most noticeable in independent senior housing with no services or limited services. Memory care housing has been least affected by the economic downturn.
As the housing market recovers and stabilizes, we expect to see a gradual reduction in vacancies across the board among senior housing products. A fully stabilized market however is not likely to occur until probably 2011 at the earliest. There remain predominantly submarkets that can support additional service-intensive senior housing, targeting those that need a substantial level of services and personal care assistance. This market continues to grow as seniors choose private senior facilities over skilled nursing facilities.
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