More than 46 million Americans are currently 65 or older. And by 2050, that number is expected to explode to nearly 90 million. If you’re a real estate investor, this is an important demographic trend you might want to pay attention to.
Let’s see what senior housing is, as well as the benefits it can offer residents. Next, we’ll explore some recent developments in the industry and consider whether this could be a good real estate investment opportunity.
What is a senior residence?
Aged housing, or senior residences, can include everything from assisted living facilities to independent living apartment communities. A wide range of options are available to meet the widely varying needs of those who meet the definition of an older person. The senior age group has no fixed age for all purposes, but is generally considered to start between 55 and 65 years old.
Seniors’ apartments often include perks designed to make life a little easier, like laundry and housekeeping services. Sometimes meal plans are also available. These apartments tend to be designed with reduced mobility in mind and may include features such as lower cabinets and walk-in bathtubs. Some also have full-time medical staff caring for residents as needed.
And since many seniors are on fixed incomes, it helps that these communities often cost seniors less than their previous living conditions, especially if they were still living in a larger-than-necessary family home and caring for all maintenance, gardening and upkeep work.
But for those concerned about the well-being of an elderly family member, the benefits of an elderly community can extend far beyond practical considerations. Study after study continues to demonstrate the positive impact of social connection on health and longevity, and senior living communities can be a wonderful way to help seniors stay social well into their golden years.
These communities often feature amenities that tend to bring people together naturally, such as swimming pools and recreation centers. And many employ full-time activity planners who plan games, parties, classes, potlucks, and other festivities.
Is it time to invest in senior residences?
The peak of the pandemic was an incredibly difficult time for most commercial real estate, and retirement homes were certainly no exception. The generally positive socialization fostered by these environments turned negative as many residents fell ill, and the necessary social distancing ended the benefits residents previously enjoyed. Some concerned family members have even removed residents from these facilities and brought them home to stay with them. But at the end of last year, real estate investment trusts (REITs) with large stakes in seniors’ residences were already showing an increase in the number of residences.
The return to something closer to normal in our daily lives, combined with the upcoming dramatic increase in the elderly population, could make now an excellent time to invest in retirement homes. If you agree, you might want to check out some healthcare REITs that own seniors’ residences. It certainly doesn’t look like this sector is going anytime soon.