Retiring seniors are no longer basing their housing decisions mainly on warmer climates, and senior housing developers and operators should take notice.
A report from the U.S. Department of Health and Human Services’ Administration for Community Aging revealed that five states saw 50% spikes in their over-65 population between 2007 and 2017. Those states are:
- Alaska (71%)
- Nevada (57.8%)
- Colorado (55.7%)
- South Carolina (50.7%)
- Georgia (50.3%)
The total over-65 population in the U.S. is projected to reach 56.1 million in 2020, and 94.7 million by 2060.
There may be several contributing factors to this growth — and the main one may be economic necessity, retirement planner Jeannette Bajalia recently told Business Insider.
The incoming generation of baby boomers will be entering their golden years with less saved for retirement and home values that have not returned to pre-2008 levels. As health care costs continue to rise, more seniors are forgoing Sun Belt states such as Florida for states with lower health care and cost of living increases, and low state income tax rates, if they have a state tax at all. Alaska and Nevada have no state income tax, while the other three have gradual income tax rates, based on income level.
These economic realities will have an effect on senior housing, as 56% of seniors in 2029 will not be able to afford market-rate senior housing at today’s rates, according to an April report from the National Investment Center for Seniors Housing & Care (NIC) and academic institutions. The national median cost for a one-bedroom assisted living unit reached $4,051 per month, according to the latest Cost of Care survey from insurer Genworth Financial (NYSE: GNW).
Colorado and Georgia are two states already on the collective radar of developers and operators. Colorado was named the best state for aging by U.S. News and World Report and its over-65 population is expected to reach 1.27 million by 2030, and 59% of that growth came from net migration.
Atlanta is the third-busiest market for senior housing construction, with 3,077 units under construction, according to a September report from real estate services firm Marcus & Millichap, which cited NIC data. Atlanta had 15.1% of its inventory under construction in the first quarter of 2019 — the most among the 31 primary markets tracked by NIC. This activity has not caused stark declines in occupancy. Atlanta’s occupancy was at 87.3% in Q2 2019, according to Marcus & Millichap’s report.