New Report Highlights Emerging Trends in Senior Housing
The senior housing industry is becoming increasingly differentiated. Businesses are moving away from more general senior housing services into more specialized offerings like “active adult” housing, “ultra-luxury retirement communities,” and a senior housing option that focuses on value. There’s an increased need for more affordable housing options, particularly for middle-income seniors.
In addition to this movement toward specialized offerings, operators are focusing more on wellness programs. Programs focusing on physical, social, spiritual, intellectual, emotional and environmental wellness are predicted to give senior housing operations a competitive edge.
These are some of the findings of the 2023 Emerging Trends in Real Estate® report, recently released by PwC and the Urban Land Institute. The publication highlights trends and forecasts for the real estate industry in the United States and Canada. The 2023 report is based on interviews with 617 individuals, as well as survey responses from more than 1,450 individuals, including private property owners, real estate service firms, real estate investors, banks, homebuilders, and more.
While the report focuses on the real estate industry as a whole, it includes valuable insights regarding senior housing. This information can help senior care leaders better understand emerging trends and challenges that will need to be addressed.
The pandemic has prompted several notable shifts in the senior housing industry. The report states that in the second quarter of 2022, construction of new senior housing units reached the lowest level since 2015. This decline in new construction may be due to several factors, including increased costs in supplies, labor shortages within the construction industry, and higher interest rates.
While the pandemic resulted in senior housing occupancies, demand is growing. The second quarter of 2022 marked five consecutive quarters in which senior housing occupancy hadn’t declined. While the increase in occupancy bodes well for the industry, the report identifies several factors that will continue to influence senior housing move-ins. They include inflation rates, interest rates, the stock market, pent-up demand for senior living settings, local market supply and demand, and the overall performance of the economy.
Challenges to the Senior Housing Industry
The report outlines several challenges the senior housing industry is facing, too. Staffing challenges are limiting the industry’s growth, and 41% of survey respondents stated that staffing shortages caused them to reduce the number of units or beds in operation. Senior housing and care operators are utilizing strategies like increasing wages, offering flexible work hours and scheduling, and improving the work environment and culture in an attempt to address staffing shortages.
As more operations rely on temporary agency workers, paying higher wages and more overtime hours, staffing expenses are increasing. The pandemic increased general operating expenses, too, which has negatively impacted net operating income.
Demographic Changes and Senior Housing
The growing number of older adults favors the senior housing industry. The U.S. Census Bureau states that there were 10.6 million Americans age 82 and over in 2022, and that figure is predicted to grow to 14.8 million by 2030. Additionally, the ratio of adult children family caregivers who can care for aging parents will shrink rapidly. In 2022, that ratio was 6:1. By 2044, it will be 3:1. Those figures indicate an increased demand for congregate care settings.
The senior housing industry has undergone tremendous transformation during the pandemic. Challenges like staffing shortages and increased costs have tested operations, but many businesses have or are finding ways to navigate these challenges.
Older adult demographics indicate future challenges ahead for the industry, including the ability to provide affordably priced services while keeping up with the significantly increased demand that the next few decades will bring. Successful operations will be able to not only respond to changing demands for senior housing options, but will also be able to plan for the shifts the industry will see.
Topics: Featured Articles , Housing , Operations , Senior Environments , Staffing , Surveys