Is Senior Housing Dead?

The Number of Senior Living Facilities Has Dropped By 600 Over the Last 6 Years

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The Number of Senior Living Facilities are Down 600 Locations and Counting, But the Aging Population Continues to Rise

Is This A Big Red Flag or A Juicy Hidden Opportunity?

Over the past six years, more than 600 senior living facilities have closed their doors for good. Last year, 125 were shuttered. This year, 97 nursing homes were closed before the end of July.

Considering that a large portion of the aging population were forced to shift to in-home care throughout the pandemic, the post-COVID contraction in the number of senior living facilities may not come as a surprise to some. However, now that the lock-down has been lifted for more than a year, you would think that occupancy across nursing homes would have begun to stabilize by now; but that hasn’t been the case. Senior housing occupancy came in at 83.7% in the second quarter of 2023. This is still 3.4% below Q1 of 2020, just before the on start of the pandemic.

Furthermore, the number of Americans over the age of 65 is expected to reach 80 million by 2040; nearly double the count of 54 million in 2020. However, new construction of senior living facilities has largely stalled. Units under construction went from 7.7% of the existing inventory, to less than 5%.

With the elderly and retirement-age population continuing to rise, but occupancy and inventory on a steady decline, is this an inflection point of burgeoning opportunity throughout the senior living sector?

Or are we slowly creeping to the very top of a bubble that is gearing up for a long-lasting down turn?

Quick Takeaways

  • More Than 600 Senior Living Facilities Have Closed In the Last 6 Years

  • Occupancy and Inventory (of Nursing Homes and Senior Living Facilities) Is Dwindling

  • But the Aging Population (65+ Years Old) Is Expected to Reach 80 Million In Less Than 20 Years

On Another Note 

✺ No More Multifamily Loans: Commercial multifamily lending has plunged a staggering 53% over the past quarter, and the MBA (Mortgage Bankers Association) predicts that loan volume will drop more than $500B by the end of the year. — MPA

✺ Retail Real Estate Has Been Resurrected From the Dead: Despite a slew of closures, the U.S. mainstream mall is making a come back. According to Coresight, foot traffic in malls is up 12% compared to pre-pandemic levels. — CNN

✺ Subway Sells for Nearly $9B In One of the Biggest Food Chain Acquisitions Ever: After more than 60 years of being privately held, the household name sandwich chain has finally reached a deal with Roark Capital, which will pay $8.95B as long as certain cash-flow milestones are met. — USA Today

✺ Buyers Are Taking a Back Seat on Vacation Homes: In August of 2020 mortgage rate locks on second-homes were up 89%, but now the pendulum has swung the total opposite way. Earlier this year second-home rate locks fell to their lowest level since 2016. — National Mortgage Professional

✺ FUNdrise Is Not Having Much FUN After Getting Hit with An $8M Fine: The real estate crowdfunding and investment platform has agreed to pay $8M in fines and penalties for failing to disclose that they paid social media influencers for promotion. — Biznow

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