The current market appears to meet the demand for all forms of housing for aging Americans -- assisted living, skilled nursing, congregate care and continuing care facilities. But several reports suggest that expected growth spurts could quickly leave the market far short of the housing it will need.

Not only will aging home owners find it difficult to age in place, but those who choose to retire to senior housing may find little room at the inn later this decade.

"The Case for Investing in Seniors Housing & Long Term Care Properties" says even though there is a current oversupply of assisted living and skilled nursing communities that leave some markets with vacancy rates as high as 10 and 20 percent, the cost to meet the growing demand for all types of seniors housing will soar from $5 billion in 2005 to $25 billion by 2010.

Produced by the Annapolis, MD-based National Investment Center for The Seniors Housing & Care Industries, the report says the growing need for all forms of seniors housing -- assisted living, skilled nursing, congregate care and continuing care facilities -- comes at a time when construction starts on some housing for aging people is at the lowest point in two years, according to NIC's Key Financial Indicators (KFI) data.

"The KFI data showed that the assisted living category posted only 29 new construction starts for the second quarter of 2001," said Robert G. Kramer, NIC executive director.

"In the two years that we've been tracking these numbers, it's the lowest number of starts reported for this sector. The highest number -- construction starts for 178 properties -- was posted in the third quarter of 1999," Kramer added.

The total amount of project financing placed in the second quarter of 2001 by major, national lenders totaled $528 million, a slight increase from the first quarter. More than $422 million of that amount was in permanent debt, not construction loans.

"The good news is that demand is increasing," added Harvey Singer, NIC research director. NIC's study comes on the heels of "Aging in Place: Coordinating Housing and Health Care Provisions for America's Growing Elderly Population," a Harvard University Joint Center For Housing study which says the housing-health care system also isn't ready for the growing numbers of aging home owners who want to "age in place" and remain in their own homes as they grow older.

"The most desirable and most cost-effective methods of aging -- aging in place -- is difficult, even under the most ideal conditions," says that reports author Atlanta-based Kathryn M. Lawler.

The NIC study says with today's occupancy rates in the mid-80 to low-90 percent range for most seniors housing product types, it appears as if there is sufficient housing.

However, the study confirms that sufficient demand will emerge within the investment horizon of today's capital sources.

"With little increase in new supply, demand will once again catch up with the existing supply," said NIC's Singer who noted that major lenders reported little to no construction financing for skilled nursing facilities.

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Published: December 28, 2001

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.