The Impact of COVID-19 on the Senior Housing Market




The effects on the COVID-19 housing market have been pronounced for everyone. While prices continue to rise, there is a sense that the economic dislocation is not over yet and there is still more impact on the way. One group of people may be particularly affected by the COVID-19 housing market. Seniors are affected because many of them are seeking to move out of their current homes and into senior housing. This means that they will both need to sell their home at a reasonable price and then be able to find available supply in a senior housing development.

Assisted living is one form of senior housing. Roughly one million seniors live in these facilities that provide them with more advanced care short of the level of a nursing home. There are also senior living facilities with less or no care that cater to people over the age of 55. One possible effect of COVID-19 is that there will be more demand for this type of housing. Families may be doing everything that they can to keep their loved ones out of nursing homes due to the fear of the pandemic. However, many seniors may end up all competing for the same space in senior housing.

Seniors May Be Looking to Make Fewer Changes During the Pandemic


However, the early indications are that senior housing demand has been falling due to COVID-19. Occupancy in these facilities had fallen over 1% since the start of the pandemic. Some seniors may be hesitating to move out of their homes in the midst of a pandemic to a community where they are around other seniors. They may also be hesitating at the prospect of having to sell their own homes to accommodate such a move. While the real estate market has remained relatively robust, seniors are understandably afraid at the prospect of having to show their home in the midst of a pandemic. Thus, more are likely to remain in place than otherwise would have before COVID-19.

Another impact of COVID-19 on senior housing is that the price could rise for those looking to purchase or simply move into a new facility. Included in the price are senior-specific amenities. The cost of labor and other services has increased dramatically as COVID-19 has caused dislocations in the labor market and the cost of services. These are all priced into the cost of senior housing and may put affordability out of reach for some.

Moreover, the pandemic may also affect seniors' retirement plans. Many seniors who would be in the market to purchase senior residences are relying on the funds in their 401(k) to provide them with income for retirement. However, the uncertainty surrounding the stock market has caused many seniors to hesitate when it comes to making life changes. Some are finding that the value of the retirement accounts on which they depend has shrunk and they do not want to cash out of their 401(k) when the value is lower.

Further, seniors on fixed incomes are also getting hit by the fact that interest rates are at a historic low. As seniors become more cautious in their investments, they move their money to bonds in order to provide them with a steady income with lesser risk. They rely on the interest to provide them with money with which to supplement their social security benefits or pension. As such, seniors have found that their income has shrunk, hurting their ability to afford senior housing.

For Investors, Senior Housing Is an Attractive Opportunity Based on the Current Market Dynamics


However, from an investors perspective, COVID-19 presents an opportunity to buy into senior housing properties. The same factors that make affordability a daunting task for those needing housing make it more advantageous for investors. The fact that pandemic-related factors will lead to price hikes can make it more profitable for owners. In the end, the seniors are the ones who end up footing the bill for increased costs that the owners pass along to them, and it pads profit margins.

From an investor's perspective, the low interest rates and the ability to raise prices make senior housing an attractive opportunity in the current market. Combined with the changing demographics of the aging population that is doing everything possible to stay out of nursing homes, senior housing may be an even better investment than other commercial or residential real estate.




Other Featured Posts


Senior Housing Development Gets Green Light in Grand Rapids

For decades in America, billions of dollars every year are pushed both privately and publically into assisted living facilities for senior citizens, better known as nursing homes. With the advances of modern medici...

READ MORE

Why Building Homes Won't Actually Solve the Housing Crisis

As you may already be aware, the nation is currently in the middle of a housing crisis. Millions of Americans are finding it hard to get affordable housing, and the American dream of homeownership is out of grasp fo...

READ MORE

19 Vital Home Maintenance Tasks

As the winter months approach and the weather starts to cool down, the drastic change in temperature can have a significant impact on your home. This is especially the case when it comes to your expenses. Luckily, there are things that you can ...

READ MORE

Read This to Get Caught Up on the Latest News in the Housing Market

There is no doubt that it has been a busy week in the world of politics and news. Lost in all of this have been headlines that may have a great impact on the housing market as we move into the new year duri...

READ MORE