We are of the view that it will continue going strong in tier one and two cities. In order to be in the forefront, it would be wise to assess opportunities now rather than later, when the sector does become saturated.
What is the future of the senior housing market?
We are a foreign real estate developer and have been observing the senior housing market in the U.S. for more than one year. It seems that the sector is overbuilt in some major markets, but we have heard that the demand is expected to drastically rise in upcoming years due to demographic changes. When may we expect to see this change? What can we do now to be on the forefront of this coming investment opportunity?
I think what you are hearing is accurate. The baby boomer generation, though working longer than previous generations for a variety of reasons, is aging and reaching retirement age in a large wave. This will dramatically increase the demand senior living. However, other factors will likely affect where and how this will impact the senior living sector. Many seniors will want to retire in a low-tax state (Florida, Texas, Nevada, etc.), especially following the newly implemented tax law. Other social changes impacting the nation and seniors will also enter into the dynamics of how and where they choose to live in retirement, and those need to be better understood. Over the next 10 to 15 years, the demand in this sector will increase but that will be followed by a significant falloff as the next generation has a much smaller population.
Real estate is always very location-specific. We still see some good demand for senior housing markets. I would not say the market is overbuilt.
Senior housing will be growing in demand, but I think the demand will be different. While some people will flock to golf course communities, others will be looking at lower tax cities, where there are universities and cultural options. One size won't fit all. You need to put in the time to look at the trends or work with people who are knowledgeable in current and future patterns.