Posts Tagged ‘Market Study’
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 »
Thursday, July 22nd, 2010
The furor over the 2011 Census reminds me of Sarah Palin claiming she understood international relations because she could see Russia from her front door. That is how all of us will have to operate in the future—without benefit of actual facts guiding our decisions.
I have noted in past posts how we rely on data from the long form to analyze seniors’ housing markets, including data on income and housing. I haven’t noted though how often we rely on mobility data to understand demographic patterns affecting markets and communities. Data from the long form tells us how many people of various age groups lived at the same address five years earlier, how many lived in another community in the same province, and how many lived in another province.
Well that is just downright intrusive, Tony Clement and Stephen Harper would no doubt say. But of course it isn’t intrusive and the data helps us to avoid mistakes. In my forthcoming book I mention the case of a former client of ours who was planning to build a big seniors’ housing project in the interior of British Columba. He was sure that people from all over Canada would flock to the community, partly because his site was in BC, an assumed magnet for seniors, and partly because it was a good site, right behind the Tim Horton’s. We were able to show him, based on long form data, that his assumption was mistaken and that the prospects for his site were not good.
Normally it is a delicate matter to tell someone that their plan isn’t a sound one but this client was far from perturbed. “You have saved me millions of dollars”, he said, and that is true.
The lack of long form data in so many areas of the Canadian economy and Canadian society is going to be an extremely costly, as well as a futile, exercise.
Tags: 2011 Census, Developers, Household Income, Housing Development, Housing Market, Market Study, Migration, Mobility, Sarah Palin, Seniors' Housing, Stephen Harper
Posted in Future, Marketing, 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 »
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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