A recent article about seniors’ housing in The Business Times, (http://www.stproperty.sg/articles-property/overseas-property-news/us-developers-go-big-on-elderly-housing/a/164783?utm_source=STClassifieds&utm_medium=Footer&utm_content=Articles&utm_campaign=Directory) an overseas investor publication, suggests that we are on the verge of a supply glut in senior’s housing, and suggests, “They [seniors’ housing developers] may be building too fast”.
The evidence for this is very, very sketchy. All the data clearly shows that development of new units is weak. And that’s as it should be, with the current demographic dip due to the birthrate decline during the Great Depression and the general mood among age qualified buyers. We are seeing capital on the sidelines looking for any comparatively safe harbor, and this is driving up the values of SNF acquisitions. Many of the current SNF acquisitions are among older, lower value inventory, and if history repeats, subsequently we will see bankruptcies when these new operators are unable to manage their staggering debt service on progressively more miserly state and federal payments.
No, there’s no glut in supply… there’s just a persistent dip in demand.