Senior Housing Improves Slowly and Steadily
Despite rising costs and regulatory complexities, the industry has shown growth, according to a Walker & Dunlop report.
Senior housing’s operational performance, though still trailing pre-COVID levels, has improved this year. Occupancy rates in the industry have consistently grown and profit margins are gradually improving, though not yet to pre-pandemic levels.
These are among the findings of Walker & Dunlop’s 2024 Seniors Housing Outlook, focusing on emerging market trends in the senior housing sector. The report also furnishes a “landscape analysis” as the industry reacts to demographic shifts and evolving healthcare needs for a swiftly increasing population of older Americans.
Below pandemic levels
Among the report’s critical insights is that operational performance in senior housing has improved in 2024. The first half of the year witnessed a total senior housing transaction volume of $3.5 billion, but still below that of pre-COVID levels.
Driven by robust demographic trends and constrained growth of inventory, occupancy rates in senior housing have seen steady gains. Among the demographic trends contributing to this statistic is that the population of Americans age 80 and older grew 4.4 percent in 2023. That is the highest level of octogenarian-and-up growth in more than a half century.
While costs for senior housing operators have increased, rents have also risen, helping drive revenues and offset inflationary pressures. And though yet to return to pre-pandemic figures, profit margins have steadily improved.
Within about 25 years, one in five Americans will be at least 65 years of age, up considerably from 17 percent in 2020, the report indicated. Both opportunities and challenges will be unleashed by this demand growth.
Increased need for services and infrastructure to serve the demographic will supply excellent investment opportunities for industry stakeholders, Walker & Dunlop predicted.
Innovative strategies
In a prepared corporate statement, Ken Buchanan, executive vice president of FHA finance, Walker & Dunlop, noted that the senior housing sector has enjoyed substantial growth, as well as an increase in interest.
Buchanan added that while the sector faces headwinds like increasing operational expenses, regulatory intricacies and the need for enhancements in resident care, innovative strategies based on technology and new services give hints of exciting promise.
New techniques and strategies to keep up with an aging population and ensure quality housing and care are a necessity. In an interview with Multi-Housing News, The Kendal Corp.’s CEO, Vassar Byrd, explained one such creative solution.
Kendal operates on a model which partners with affiliate organizations to provide support and services. These affiliates will share the cost of IT infrastructure, software and occasionally even hardware. It’s cost-effective, she noted, and prioritizes a diversity of perspective and opinion in decision-making.
