A recent article about investors flocking to seniors housing brought back memories of Alfred E. Nueman’s famous tag line. The lead on the article read: “Investors Flock to Senior Housing, Dismiss Oversupply Worries”. “ Mad Magazine used the fictitious Alfred E. Nueman as its mascot to make a point in contrast – devil may care on the surface, with mischief lurking behind the smile.
What prompted this association? Because investors should be worried about oversupply, and about occupancies and therefore should be more concerned about their investments!
Seniors housing feasibility – the devil’s in the details
What’s amazing is the lack of caution, despite the overall signs in the markets, and the devil-may-care attitude of some investors and developers. This may seem a troublesome detail, but occupancies are declining in most marketplace areas. The decline in occupancy isn’t because sales and marketing have collectively fallen asleep across the USA, it’s because the market for age qualified individuals is declining.
From 1925 to 1945, birthrates in this country, and many parts of the world, plummeted due in large measure to the Great Depression and war. These are the lowest birthrate years on record in the United States. I have labeled this the “birth dearth” or “demographic dip” that precedes the Baby Boom. And if you were born in 1929 – the start of the Mad Magazine fun – you’d be 86 years old this year. And the average age at which age qualified individuals relocate to Assisted Living according to NIC? You guessed it – 86.4 years of age.
To succeed, investors must take a long view, and developers need a new model for market analysis and feasibility that takes into consideration the birth dearth, or demographic dip.