Covid-19 has been an unexpected boon to the residential housing market. The resiliency of the market, which has seen home sales numbers and prices eclipse 2019 levels, is a positive trend for the senior living industry, given that people often sell their homes to pay for transitions into communities.
Existing home sales increased for the fourth consecutive month in September, according to data from the National Association of Realtors (NAR). Adjusted for season, 6.54 million homes traded last month – a 9.4% increase sequentially and a 19% jump, year-over-year.
The median sale price for single-family homes last month was $311,000 – a 15% increase over the previous year. Total housing inventory decreased to 1.47 million homes, a record low at the current sales pace. And 71% of homes that sold last month were on the market for less than a month.
The housing market has steadily rebounded from the pandemic’s early weeks and posted four consecutive months of sales gains, according to NAR data.
This trend, along decreasing unemployment numbers, may result in a trickle-down effect to senior housing, especially in markets that are able to ride out pandemic-related disruption for the foreseeable future due to high occupancy rates. These markets, and the industry as a whole, will be put to the test as a new wave of positive coronavirus cases sweeps the country.
Senior Housing News compared Q3 2020 data from the top 10 primary markets for senior housing according to NIC MAP Data Service, along with unemployment numbers from the Bureau of Labor Statistics and housing values compiled by Redfin, to find four markets where senior housing may prove resilient to Covid-19’s continued pressures.
Total senior housing units under construction: 1,340 (658 independent living, 682 assisted living)
Senior housing occupancy rate: 84% (90% majority independent living, 80% majority assisted living)
Median home price, October 2020: $305,000 (9.7% increase, year-over-year)
Most recent unemployment rate: 5.9%
Minneapolis’ housing market has performed well during the pandemic. In addition to a solid median sale price, the number of homes sold has increased 26% year-over-year. The median number of days a home is on the market before being sold is 16 days – a decrease of nearly 24% over the previous year.
The rising home values are tied to a strong workforce market. Minneapolis’ unemployment rate has dropped precipitously from a high of 10.1% in May, and the city’s workforce includes a balance of professional and business services, information services, education and health, financial, leisure and hospitality and trades, according to a report on vulnerable and resilient cities for real estate investing from real estate investment firm Unison.
From a senior housing occupancy perspective, Minneapolis’ occupancy rate, particularly on independent living, suggests that providers in the metropolitan area are well-positioned to withstand continued operating pressures, and rebound from the pandemic faster once it subsides.
Total senior housing units under construction: 488 (349 independent living, 139 assisted living)
Senior housing occupancy rate: 84.8% (88.2% majority independent living, 78.6% majority assisted living)
Median home price, October 2020: $195,000 (22.6% increase, year-over-year)
Most recent unemployment rate: 6.5%
Charm City’s unemployment rate has declined steadily from an April high water mark of 10.1%, with significant rebounds among construction, manufacturing and the trade industries. Leisure and hospitality, meanwhile, continue to struggle as the pandemic continues; employment in the sector fell nearly 19% in September, year-over-year.
Housing sales, meanwhile, are picking up steam. In addition to the median sale price, the number of homes sold increased 22.3% over the previous year, while the average number of days on the market fell over 32% to 31 days, compared to 2019.
NIC MAP’s data shows some slight bifurcation between Baltimore’s independent living and assisted living occupancy rates, which independent living providers can capitalize on as move-ins accelerate. The city’s small construction pipeline, meanwhile, will favor demand for senior housing as the pandemic persists.
Total senior housing units under construction: 693 (151 independent living, 542 assisted living)
Senior housing occupancy rate: 85.3% (86.6% majority independent living, 84% majority assisted living)
Median home price, October 2020: $747,000 (10% increase, year-over-year)
Most recent unemployment rate: 7.3%
The Emerald City boasts a diversified workforce, largely courtesy of e-commerce giant Amazon which employs large numbers in transportation, information and financial services. Amazon has added over 220,000 new jobs in Seattle in the past decade, Business Insider reports.
The unemployment rate, meanwhile, has improved significantly over the past seven months. After peaking at 16.1% in April, the unemployment rate fell over 44% to 7.1% in September.
Amazon’s growth has had a corresponding impact on housing values. A new study from Construction Coverage placed Seattle 11th among major cities where home values have exploded over the past decade. The percentage in median home price during that span spiked 83.2%.
Seattle also has the smallest differential between independent living and assisted living occupancy rates – 2.6% – suggesting that demand for both care segments is strong in the market. A relatively small construction pipeline will likely contribute to a swing in supply and demand moving forward, as more seniors age into the space.
Total senior housing units under construction: 590 (143 independent living, 447 assisted living)
Senior housing occupancy rate: 85.5% (88.1% majority independent living; 82.9% majority assisted living)
Median home price, October 2020: $486,500 (20.6% increase, year-over-year)
Most recent unemployment rate: 7.7%
The Pacific Northwest saw a huge spike in unemployment in the spring, and Portland was no exception. After peaking at 14.2% in April, the market’s unemployment rate improved to 7.7% in September. The leisure and hospitality sector, in particular, continues to struggle, but even that segment has shown signs of life over the length of the pandemic. Employment in the sector fell 56.8% in April; it improved to a 30.4% annual dropoff in September. Workforce sectors experiencing strong rebounds include financial activities, information services and construction.
Portland claims a narrower differential between independent living and assisted living occupancy rates than many of the other large markets – 5.2% – and the construction pipeline is weighted toward assisted living. Portland also is a market in which senior housing options are well-established, which is likely a factor in the city’s high penetration rates. As of 2018, Portland’s penetration rates were highest in the nation both for independent living (11.8%) and assisted living (10.4%), according to NIC data.