Texas Leads Nation in Construction of Senior Housing
There are more senior housing units under construction in Texas than anywhere else in the country, according to a research report from Marcus & Millichap, a real estate investment services firm. There are currently more than 2,000 units of senior housing being built in Texas. Thirteen states, including Minnesota, Florida and Tennessee, have more than 1,000 but fewer than 2,000 units under construction.
The firm’s report said that the construction was driven by demand, particularly for dementia care. About 40 percent of people over the age of 85 have Alzheimer’s disease or other dementia, and the over-85 population is expected to increase by four percent by 2017. According to these projections, an additional 90,000 people will be living with dementia in four years’ time, and facilities that include dementia care will be needed.
The increased demand for senior housing is also spurred in part by an improving housing market. A recent increase in home prices fueled by low interest rates has meant that fewer homeowners are “underwater” on their mortgages. Without the burden of negative equity, more seniors have been able to sell their homes and move into independent living facilities. According to Zillow, a company that tracks the housing market, the percentage of homeowners with negative equity has plunged to 25.4 percent, representing 2 million homeowners who are no longer underwater.
The firm’s report said that occupancy in different types of senior housing would be affected differently. The firm made projections for occupancy in housing types including independent living, assisted living, skilled nursing and continuing care retirement communities.
The occupancy rate for independent living facilities was projected to increase 30 basis points to 90.2 percent, driving average asking rents up to $2,810 per month. The assisted living occupancy rate was expected to drop modestly due to the new development, decreasing to 89.7 percent. Nonetheless, average asking rent was expected to climb to $4,180 per month.
Demand for skilled nursing facilities was expected to drop somewhat, with the occupancy rate dropping to 87.5 percent. Average rents were still projected to rise to $275 per day.
The final sector analyzed in the report is continuing care retirement communities. The occupancy rate for this type of senior housing was expected to rise to 89.8 percent.
The investment firm compiled their report based in part on data provided by the National Center for the Seniors Housing & Care Industry.