Who Is Living in Senior Housing?

Mark Myers is an executive director at Marcus & Millichap.

LOS ANGELES—It is true that 62-years-old-and-older demographic is growing, but that may not be enough to justify more senior housing development. According to Mark Myers , executive director of Marcus & Millichap , seniors housing demographics can be misleading because only 12% of age-qualified seniors use seniors housing, and of that group, the average age is 85. “The average age for senior housing is 85, not 62,” Myers tells GlobeSt.com. “A 62-year-old might live in an active adult community with golf courses and tennis courses, but for senior housing, which is independent living, assisted living, nurses care, where you actually need services, those folks on average are 85 years old. Baby boomers are still years away from being 85. Even the big contingent isn’t going to come to fruition for another 20 years.” Even then, only 12% of seniors take advantage of—or for that matter need—senior care, which includes independent living, assisted living, skilled nursing and continuing care retirement communities. “The challenge with senior housing is that is doesn’t take much to overbuild,” says Myer. “If you look at the age-income qualified cohort for seniors, only about 12% of them actually takes advantage of senior housing. So, if you have 1 million seniors in a market that are age-income qualified, only 12% of those people would actually take advantage of senior housing. People often look at the aging cohort and think that there is a huge market for senior housing, but don’t realize that it is really a fraction of that. Just because you are age-income qualified doesn’t mean that you are going to do it.” The takeaway here is that overdevelopment is a bigger risk if developers only look at the growing age demographic to justify development, but Myers isn’t saying that it doesn’t help. “The demographic increasing over time is certainly not a negative,” he says. “I am just saying that it is going to be quite a while before the material effect of that is felt. That doesn’t mean it is a negative; at least the population is growing in that age cohort, rather than shrinking. Shrinking would be worse.” But, demographic sizing shifts can be deceiving for developers. Myers uses the baby boomer and baby bust generations as an example. “We are going to need a lot of senior housing in about 15 years, but then in about 30 years, we are going to need a lot less senior housing,” he says. “What is going to happen when we have all of this product? I guess that is for the next generation to figure out.”