Archive for September, 2010
Tuesday, September 28th, 2010
According to a recent report from NIC (the National Investment Center for the Seniors Housing and Care Industry) overall occupancy in US seniors housing projects is about 88%, with no signs on the horizon of any significant improvement any time soon. The housing market is still very weak and interest rates on popular savings vehicles like Certificates of Deposit are very low, meaning seniors are not feeling remotely rosy about their financial prospects.
On the bright side, 33% of stabilized properties were at 95% occupancy or higher. What is it about these properties that makes the difference in occupancy levels? One thing for sure is the importance they place on trained and effective sales staff. NIC statistics show that an astonishing 85% of people in sales positions are not sales professionals. To quote NIC:
“They are not purposely selected, trained, compensated or managed as such. Professional selling is both science and art. An average property (location, pricing, etc.), with the right sales professionals can and should be at or above 95% occupancy today. But many owners are not willing to invest in or don’t understand what professional selling is and thus are under 88% occupancy today. Investing in sales professionals produces the highest return on investment under any capital budgeting analysis. Thus, if an owner has capital, there is no more productive use.”
That’s interesting isn’t it? Compelling even.
Tags: Housing Market, Market Study, Seniors' Housing
Posted in Market Studies, News, Seniors' Housing | Comments Off
Thursday, September 9th, 2010
In the United States, where they have a quaint habit of collecting reliable data that sheds light on matters of interest and importance to their society (unlike Canada, where we consider this practice outrageously intrusive), data from the 2009 American Housing Survey have just been released.
For the 65+ group, the most common reason for moving was to be closer to work/school/other. The questions (and answers) apply to all age groups, which is why “closer to family” doesn’t appear as a specific choice. It is very likely though that closer to family is the primary motivator for this group.
No surprise there. But the second most common reason, chosen by almost as many people as “closer to work/school/other” was “needed larger house or apartment”. Now that IS surprising.
On the unsurprising front again, only 7% of 55+ households reported living in an age-restricted community. Of course we have no idea what the comparable Canadian figure is, but it is probably lower for reasons I have discussed in earlier posts.
90% of US households of all ages live in unsecured (ie ungated) communities, but new construction is more likely to be in gated communities.
We will post again about the AHS.
Tags: 2011 Canadian Census, Age of entry, Aging, Aging in place, American Housing Survey, gated communities, Housing Development, Housing Market, Housing Options, Migration, Mobility, Seniors' Housing, snow birds
Posted in Future, News, Seniors' Housing | Comments Off
Friday, September 3rd, 2010
Over the last couple of years, slumping housing markets in Canada and the US have most definitely affected occupancy levels in seniors’ housing projects. We have posted about this issue before. One of my concerns has always been that even after housing markets recover it will take older people even longer to forget the reversals experienced in the market. To use some technical jargon, they may well be spooked and continue to delay taking any kind of action on moving to more supportive environments.
Housing markets in the US looked a bit more robust for a while, but the expiration of special incentive programs has resulted in more gloom. New home sales in the US recently hit a 40 year low while sales of existing houses hit a 15 year low. That is not good news for the seniors housing industry. Past posts have discussed the very close correlation between the state of the housing market and occupancy levels in seniors housing projects.
In Canada, the housing market has also definitely slowed down, although we are light years away from the debacle in the US. Nevertheless, the roller coaster-like movements in Canadian housing markets over the last couple of years will not be comforting to seniors contemplating a move.
What’s going to happen over the next 6-12 months? Who knows, but I always think back to the last significant “adjustment” in BC housing markets. It seems like a very long time ago, but the last half of the 90s was a very slow period in terms of starts, sales, and prices.
Players in the industry would be well-advised to factor a relatively long-lasting “relaxation” in provincial housing markets into their business plans.
Tags: Housing Development, Housing Market, Housing Options, Market Study, Seniors' Housing
Posted in Future, Market Studies, Seniors' Housing | Comments Off
Wednesday, September 1st, 2010
I have made this point before several times (about the vastly superior information on the US seniors housing industry) but I was struck anew by the disparities between our two countries earlier this week. The wonderful National Investment Center is celebrating its 20th anniversary. It also has a new Research Director. In a recent newsletter, the Research Director talked about some of the directions he wants to pursue over the next few years. Here are some of the things he said:
Given the ever-increasing interest in our sector, we’re working to stay ahead of the curve, so to speak, by anticipating the research needs of our industry’s participants and prospective participants. Therefore, our top research priority remains the product enhancements associated with NIC MAP. That includes not only a forthcoming tool for portfolio benchmarking but also thereafter reports providing local trends analyses. In addition, NIC MAP reports soon will incorporate detailed sales transactions metrics, and we look forward to regularly reporting market effective rents, which incorporate any leasing promotional discounts. Later this year, in our ongoing effort to disseminate insightful and timely industry research, we’ll publish the inaugural edition of the NIC Investment Guide 2010 that will serve as a primer on our property sector and has been proclaimed by a number of the draft document’s reviewers as an unprecedented comprehensive overview of our industry.
[NIC Map is a quarterly data and analysis service that collects and disseminates a broad range of information on the seniors housing industry in the top 100 metro areas in the US.]
From a Canadian perspective, that is just an incredible goal. We are so far behind the curve we have no idea if it even exists or if we are in danger of driving off the road.
Here’s what I mean. Over the last few weeks it has become apparent that one of the sub-regional markets we track in the metro Vancouver area is very soft—much softer than any of the operators will admit to and much softer than the CMHC Seniors’ Housing Report indicates. The CMHC report indicates that the vacancy rate in this area is well under 10%. Legitimate people (ie real people, not mystery shoppers) seeking accommodation in this area have been led to believe that there are very few vacant units available and that anyone wanting a unit needs to act fast. If we were mystery shopping the area we would be told the same thing, although we are a lot more sceptical about what marketing people tell us. We look for other signs confirming the official story but often it is very hard to tell what the true vacancy situation is.
Rather disconcertingly, reliable information indicates a vacancy rate in this area that is approaching 20%. I can understand the motivation of the marketers: telling people you have a vacancy rate of 15% can be discouraging to prospective residents.
But the enormous difficulty of trying to truly understand the market means the signals to operators, developers, lenders, and analysts are confusing or contradictory or both. Not to mentions disingenuous to the consumer.
Tags: American vs. Canadian Seniors Housing, CMHC, Housing Development, Housing Market, Housing Options, Market Study, National Investment Center, Seniors' Housing
Posted in Market Studies, Marketing, News, Seniors' Housing | Comments Off
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