Although most analysts agree that one of the most promising housing sectors for the near future is senior housing, the current housing slump is taking a toll on that very market. Rental and condo developments marketed to senior citizens are definitely attractive to the aging population because they require less upkeep and offer more amenities, but seniors are having trouble unloading their old homes in this market. And although according to Mike Pardoll, senior vice president of investments at Marcus & Millichamp, “the seniors housing sector has improved significantly from last year,” he adds that much of the improvement is due to the need for rehabilitative services and skilled nursing facilities, which could leave out many “active living” communities that simply hoped to attract the senior population with appealing activities and low maintenance homes.
As a result of the continued housing crawl toward recovery, some senior living homes are thinking creatively about how they fill rooms and suites. For example, some seniors are using “gap loans,” which are home equity loans the enable a homeowner to budget for having their house on the market for a year. One senior living community actually suggests and facilitates the use of these loans, since they can be used to pay apartment rental expenses. Other facilities are opting to rent out condos instead of only selling them in order to fill more vacancies.
This time last year, it seemed like senior living was about the only area of new construction in the market. It will also be interesting to see the effect of the discontinuation of reverse mortgages by Bank of America and Wells Fargo. This could help or hurt the active senior citizen market. We may not know the answer for some time to come, but it certainly will have an impact. The frightening thing is that there seems to be an acknowledgement in this market sector that seniors are having difficulty getting their current homes sold.