Archive for the ‘Market Studies’ Category
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 | No Comments »
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 | No Comments »
Tuesday, August 3rd, 2010
As I have said before numerous times in this blog I believe that the changes the federal government is making to the 2011 Canadian Census by removing the mandatory long form are completely boneheaded. Here is another example of data that will no longer be available:
In Richmond, a suburb of Metro Vancouver, 40% of the 65+ households live in a condo. In New Westminster, another suburb, 61% do. Is that because it’s easier for seniors in New West to downsize? Proportionately, there are twice as many apartments in New West than there are in Richmond (another long form fact) so that’s one possible explanation. Another possible explanation could be that seniors in New West have lower incomes than seniors in Richmond and can’t afford to live in single detached houses. Here’s how that hypothesis pans out: the average income of 65+ households in Richmond is $52,385; in New West, $47,010. So that’s another possible explanation. Or perhaps 65+ households in New West are smaller and don’t need the space of a single detached house. And the facts? 57% of 65+ households in New West are non-family households, meaning most will be single person households. The comparable figure in Richmond is 38%.
Well who cares says Stephen Harper, Tony Clement, and the Fraser Institute.
Communities that want to become elder-friendly care. They need to understand the housing situation of people living in their communities now, as well as how the community can accommodate people who might move there in the future.
For-profit and not-for-profit developers of seniors’ housing care too. Spend $20 million on a housing project without understanding the market? Not wise. Hold on a minute though say SH, TC, and the FI, if they need that information they can darn well go and get it themselves. But they can’t—they won’t be able to replicate the comprehensiveness or the reliability of census data, even if they spend huge sums of money trying to do so.
Many people and companies of all sorts in the seniors’ housing and health care industry will be hobbled by the absence of the long form. The whole situation is, as I have said on earlier occasions, very sad.
If only more people read this blog! A Canadian Press story appearing on August 2nd opines that the Tories believe not enough people really care about the census and the whole thing will blow over. I hope that is not true.
Tags: 2011 Canadian Census, 2011 Census, Aging, Housing Development, Housing Market, Seniors, Seniors' Housing
Posted in Future, Market Studies, News, Seniors' Housing | No Comments »
Wednesday, July 14th, 2010
As the government is still persisting in its wrong-headed plans to ruin the 2011 Census, I thought it would be useful to explain in a little more depth why the Census information is so critical for seniors’ housing analysis.
Here is an example of a table we always use when we are doing a market study or a community housing needs assessment. Here are just a few of the things this table tells us:
- 83% of the 55+ households in this community are homeowners.
- The average income of the renters is $38,509 compared to $73,094 for the owners.
- Single (non-family) renters over the age of 85 have the lowest average incomes.
- Although not shown in the table, the detailed data indicate that there are 565 renter households aged 65+ in this community with an income lower than $14,999. These are the households facing serious challenges in terms of meeting their housing needs.
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Owners
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Renters
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Family Hshlds
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Non-Family
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Family Hshlds
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Non-Family
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Total
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Avg Inc
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Total
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Avg Inc
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Total
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Avg Inc
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Total
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Avg Inc
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55-64
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4,880
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$101,729
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1,030
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$47,153
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600
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$61,629
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510
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$30,613
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65-74
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2,450
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$67,633
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815
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$36,961
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220
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$41,969
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405
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$28,178
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75-84
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1,140
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$63,158
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1,030
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$32,375
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125
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$35,366
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265
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$26,375
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85+
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200
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$50,621
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255
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$24,358
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60
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$47,584
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235
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$24,220
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Sadly, we will never have this level of knowledge about seniors’ housing markets in future years because all of this information comes from the long form.
For-profit and not-for-profit developers, communities, governments, market analysts—we will all be forced to guess what is going on. Tragic.
Tags: 2011 Canadian Census, Aging, Census Data, Household Income, Housing Market, Market Study, Migration, Mobility, Senior Housing, Seniors' Housing, Seniors' Incomes
Posted in Future, Market Studies, News, Senior Housing, Seniors' Housing | No Comments »
Friday, July 2nd, 2010
Understanding disability rates and how they affect housing market behavior, in particular moves to supportive housing or assisted living, is a very difficult thing to do. Statistics Canada tells us that 43% of the 65+ population in Canada have some degree of disability, primarily mobility, agility, pain, or hearing. Of those with disabilities, 60% are mildly or moderately disabled, while 40% have severe or very severe disabilities. What “mild”, “moderate”, and “severe” mean is not easy to define. Statistics Canada uses a complicated rating system to categorize disabilities. At any rate, the question is how these disability rates affect housing market behavior.
To establish a context for his discussion, it’s useful to reflect on the fact that the huge majority of houses in Canada are neither “visitable” nor “accessible”, meaning they do not accommodate aging in place. So does this mean that when people become disabled in some way will they move to supportive housing? Maybe not all people, or even a majority of people, but some quantifiable proportion? Alas, no. We know that entrance into service-enriched housing such as supportive housing or assisted living is primarily need-driven, which means that people move into these types of environments not because they want to but because they have to. However that does not necessarily imply the presence of a disability—people may move because their spouse died and they are afraid to stay alone, or because they are isolated, or not eating properly, or because they have lost their driver’s license. And couples with disabilities are much less likely to move to supportive housing than individuals because they are able to help each other. If there were some way to quantify demand based on disability status we would have to adjust for the number of couples in a market area, which would further complicate an already suspect analysis.
As a result of all these confounding variables, in my view it is not possible to arrive at any conclusions at all about the demand for service-enriched housing in a community by applying national disability rates to the seniors’ population and assuming that some arbitrary proportion of that group will choose to move to service-enriched housing. Some market analysts do this I am sad to report. Be careful if you are working with one.
Tags: Aging, Aging in place, Assisted Living, Disability, Housing Market, Housing Options, Mobility, Senior Housing, Seniors' Housing, Supportive housing, Universal design
Posted in Market Studies, Seniors' Housing | 1 Comment »
Thursday, May 20th, 2010
Since one of Lumina’s business lines is market studies, it may sound self-serving for me to say that it is false economy of the worst kind to launch a real estate development project of any kind without doing a market study first. But very often, developers have great difficulty grasping the fundamental truth of this observation, partly because of personality. Lack of confidence is not a trait shared by many developers but it is easy to tip over the line from confidence to hubris. Even granting a solid understanding of a market on the part of a developer, a third party study is invaluable in terms of reducing risk and maximizing profitability. Lenders know this, which is why they are usually more likely to require a market study than a developer.
To make the matter more complicated, there are numerous ways for market studies to go off the rails, many of them not especially obvious to casual or uninformed observers, OR, it must be said, to unethical market analysts who write “market studies to order”. Firms like this certainly exist and in most cases, knowledgeable industry participants know exactly who these companies are.
In future posts (interrupted by posts from Phoenix, where I am headed to the ALFA conference on Sunday) I will address some of the ways market studies can go off the rails and what you should watch for. This is assuming of course, that you are interested in a market study that tells you the truth.
Tags: ALFA, Developers, Housing Development, Housing Options, Market Study, Senior Housing, Seniors' Housing
Posted in Market Studies, News, Senior Housing | Comments Off
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