Retirement Community Prices May Turn Up
Rental rates at high-end senior housing complexes firmed up last quarter. While results vary by market, the industry is encouraged by signs of stronger senior demand for housing units. Valuations of entire housing complexes also have been rising, supporting the view that weak conditions finally may be giving way to growth and, eventually, the addition of more new units.
Since the housing bust began several years ago, many prospective residents of retirement communities have been unable to sell their homes. Proceeds from such home sales have been the dominant source of community entrance fees. Coming off a strong period of national expansion, many of the country’s retirement communities were not able to fill their units and had to offer reduced-cost packages to attract new residents. Vacancy rates edged up, numerous complexes were sold to better-funded owners, and a small number of facilities went bankrupt.
Because new and expanded senior facilities can take many years to develop, the first sign of an industry recovery is expected to be reflected in higher rents for existing units. The National Investment Center for the Seniors Housing & Care Industry (NIC) collects detailed information on senior housing from 12,000 facilities providing independent living, assisted living, and nursing care units.