Here’s what happened last month in senior living.
After being largely silent in the senior housing market since 2015, private equity buyers took part in 55% of transactions in the first quarter of 2016, according to new data from CBRE’s National Senior Housing. REITs and other publicly traded buyers, traditionally making up the majority of sales, have backed off of the market in 2016. They were in on only 15% of first quarter deals.
The report also indicated that first quarter sales are significantly down in senior housing, coming in at less than half of last year’s first quarter earnings.
Source: Senior Housing News. How Private Equity Went from Desperate to Dominating in Senior Housing; CBRE’s National Senior Housing. Senior Housing Market Insight.
The increase in the population of older adults will drive significant changes in the US housing market, according to a new study by Harvard’s Joint Center for Housing Studies. Researchers found that the number of older adult households will increase from 16% in 2015 to 21% in 2025. Further, 40% of the additional 13 million households that will be added to the housing market in the next decade will belong to adults ages 70 and older.
Source: Argentum. Study: Aging Population Will Have Profound Effects on Housing Demand; Joint Center for Housing Studies of Harvard University. The State of the Nation’s Housing.
According to a recent brief by the American Seniors Housing Association (ASHA), 1.8 million new senior housing residences need to be built by 2040 to accommodate projected demands. The rate of demand is expected to soar after 2025, when the Baby Boomer generation enters their 80s. To meet this influx, senior housing production will need to increase to 100,000 new units per year between 2025 and 2040.
Source: Senior Housing News. 1.8 Million More Seniors Housing Units Needed by 2040.
According to a new report by Freddie Mac, 70% of adult renters over 55 would rent their next residence. This group proves to be an attractive prospect for senior housing providers. While 44% of the Silent Generation plans to stay in their current rental, only 24% of younger Baby Boomers surveyed aim to age-in-place.
The study also found that retired renters living in multifamily housing are four times more likely than those in single-family housing to move into a senior living community.
Source: Senior Housing News. Why Older Renters Make Good Prospects for Senior Housing; Freddie Mac. Americans 55+ Assess Current and Future Housing Options.
According to new data from Ziegler’s CFO Hotline survey, 53% of senior living CFOs are responding to labor demands by outsourcing staffing needs to temporary workers. Only 16% have resorted to lowering resident numbers to offset shortages.
Those surveyed indicated that high turnover was the chief cause of current staffing challenges. Looking to the future, 73% anticipate the new Department of Labor overtime ruling, which takes effect in December 2016, will have a moderate to severe negative impact on staffing.
Source: Senior Housing News. Senior Living Leans on Temp Workers, Bonuses to Combat Staffing Woes.