Lifestyle Opportunities for Seniors to Lead Housing Market Recovery in Florida

“The graying of the baby boom generation will result in a greening of the housing industry,” said George Livingston, Founder and Chairman of NAI Realvest and Chairman and CEO of Realvest Development and CommerCenters in Maitland, Florida.

According to Livingston, the growing demand of an increasingly aging American population for more, better and more affordable lifestyle opportunities will likely drive the housing industry recovery in Florida and similar regions. Demand is particularly strongest, he said, for specialized housing with assisted living facilities. Assets with dementia units, he noted, are especially in high demand.

According to the U.S. Census Bureau, the number of individuals in the US between the ages of 65 and 84 will increase by 38.8 percent between 2010 and 2020, while the population over age 85 will increase by 18.7 %.18  This aging of the population will create a large area of unmet demand. As these baby boomers retire and the incidence of progressive illnesses like Alzheimer’s disease increases, the demand for nursing homes, assisted-living facilities and retirement communities is expected to balloon in the next two decades. The number of Americans over the age of 65 is expected to double to 71 million by 2030, and 7.7 million of them will suffer from Alzheimer’s disease, a 50 percent increase from today, according to the Alzheimer’s Association.

In 2008, when the housing market collapsed, construction of new retirement and assisted-living housing, as with most commercial real estate properties, dropped just as access to capital evaporated. On the part of the seniors, the credit crunch which came with the Great Recession has in turn made it financially hard for them to move into retirement homes and assisted living facilities. Fewer than expected opted to settle in retirement communities, and the many who were in need of assisted-living arrangements instead had to move in with family. Many older Americans have also opted to seek out retirement communities abroad. Mexico, in particular, has seen a rise in the number of U.S. retirees seeking assisted living services within its borders.

Now, the situation has changed. The demand for housing for the aged exceeds supply. Nationwide, independent living facilities are about 85 percent occupied, substantially below past highs of about 92 percent, said Livingston, but occupancy has been on the rise through the past seven quarters and is expected to improve further through 2013. Rents are projected to increase by 3.5 percent.

There are also strong incentives for investors to now go into senior housing, according to Livingston, as risk capital comes off the sidelines. Since assisted living is tied to health care, it is an attractive lending option for banks which are just beginning to loosen credit. Assisted-living facilities can attract government underwriting, which make them safer bets than hotels and high-rise buildings. Furthermore, assisted-living property owners, according to the National Investment Center for the Seniors Housing and Care Industry, have a less than 1 percent default rate.