As the senior housing industry struggles to adapt to declining occupancy rates and staff availability, investing in quality market analyses is a crucial step before breaking ground. As new industry trends emerge, new areas of the market need to be monitored by senior housing owners and operators.
These new market feasibility indicators include seniors’ individual net worth and labor market status, industry experts said at the recent Senior Housing News Summit in Chicago.
Spotting red flags
The inability of older adult populations to afford some of the higher-end communities being built was one topic on the agenda, and the reason often boils down to hidden factors that historically have not been included in market studies, according to Jamie Timoteo, vice president at Plante Moran Living Forward, the senior living development consulting division of the nation’s 14th largest certified public accounting and business advisory firm.
Studies used to look at the percentage of seniors in a market area that own homes which they could sell and use the equity to pay for senior housing. However, it’s important to also look at how many of these seniors still carry a mortgage, Timoteo pointed out.
“We need to add net worth into these analyses,” Timoteo said. “Then, we should make sure that there is a big gap between net worth and home equity value. If there is a small gap, that means that every piece of that senior’s asset value is held in their home, which could be a potential red flag.”
Another big concern is the declining health of the labor market, which in some areas has been dire enough to cause senior housing facilities to turn away potential residents because they do not have enough staff to provide needed services, said Lana Peck, senior principal at the National Investment Center for Seniors Housing & Care (NIC).
The result is that owners and operators are looking more closely at the state of the labor market in potential growth areas.
“Staffing has been the number one challenge for our company and we’re finding that other owners and operators have the exact same problem,” said Diane Kenney, vice president of sales and marketing at Minnesota-based senior living provider Ecumen. “So we’re adding that into the analysis we do before opening a community now.”
Digging into the data
With complications like occupancy and labor concerns taking a toll on the senior housing industry, it’s more important than ever for owners and…