Nursing Homes Hit Hard But Vaccines Bring Relief

The coronavirus has taken a disproportionately brutal toll on older Americans. The COVID Tracking Project states as of March 4, 2021, of the total 510,383 people who died due to COVID-19 in the US, 174,474 deaths or 34% occurred at long-term care facilities. Nursing homes constitute a large subset of eldercare housing.

The National Investment Center for Seniors Housing & Care (NIC) reported last year occupancy in nursing homes dropped more than 12%. At the end of 2019, nursing home occupancy was 84.1%. It fell to 71.7% by the end of December 2020.

However, with vaccinations, from December to February, at nursing homes deaths plummeted more than 65% and new cases dramatically decreased by 80%, according to The New York Times.

Private Pay Seniors Housing

NIC tracks and analyzes market-rate, private pay seniors housing, which includes assisted living and independent living properties, separate from nursing homes.

Bill Kauffman, a senior principal at NIC, tells GlobeSt, “When you have a pandemic where the most vulnerable population lives inside your buildings and on your properties, there will be a significant impact, and that’s what we’ve seen.”

With NIC’s data of top 31 metro markets, in 2020 senior housing occupancy declined 6.8%. It shrunk from 87.5% in the first quarter to 80.7% in the fourth quarter. During that same period, in the New York metro area, the reduced occupancy rate was comparable to the national trend, with a 6.6% drop, decreasing from 89.8% to 83.2%.

Seniors Housing Market With High Inventory

Kauffman says three components come into play in assessing the markets: occupancy, future supply and recovery of demand lost from the pandemic.

NIC’s data shows at the end of 2020, cities with substantially lower seniors housing occupancy include Houston at 73.5% and Miami at 76.7%. These markets experienced more vulnerability at the pandemic’s outbreak, having anticipated greater demand. “The timing was not ideal, to say the least,” explains Kauffman. “They had a significant supply coming online as well construction in the pipeline.”

In the top markets, 5.5% of inventory was under construction. Both Houston and Miami had over 11.0% under construction.

Nonetheless, Kauffman predicts pent-up demand will revive seniors housing, especially with the ongoing vaccinations. Assisted living communities can fulfill the human need for socialization, which combats isolation.

GlobeSt had reported in December on optimistic signs for the seniors housing sector. “The question is how long does it take to bounce back?” comments Kauffman.

Demand for Affordable Seniors Housing 

Private pay seniors housing has not received appreciable, earmarked federal support. The $1.9 trillion American Rescue Plan allocates $250 million for strike teams to help skilled nursing care facilities during COVID-19 outbreaks. It provides another $200 million to the US Department of Health and Human Services to assist with COVID-19 infection control at skilled nursing facilities. The relief does not include funding for seniors living communities, according to a March 12 NIC article.

However, affordable housing provides more options for governmental funding. Victor Sozio, a founding member of Ariel Property Advisors, spearheads the firm’s work in this area. “I think the affordable housing industry felt energized by the new administration,” he says. “It’s clear there will be increased spending and opportunities to address a lot of the concerns that have been brewing over the years.”

Buwa Binitie, the managing principal at Dantes Partners, has focused on applying affordable financing tools to seniors housing. Even with the pandemic’s trauma wreaked upon the elderly, looking at the demographics, he foresees an inevitable demand for affordable seniors housing. Currently, there are an estimated 73 million Baby Boomers (born from 1946 to 1964), all of whom will be 65 or older by 2030, according to the US Census Bureau. In 2018, there were 52 million people in this 65 years and plus cohort, making up 16.0% of the US population.

Mission-Driven Housing

Binitie points to the racial and wealth divide in the DC area, where his firm is headquartered. It was one of the reasons motivating his entrance into real estate.

“If you look around and see yourself as a senior, you should be very concerned about whether or not you can continue to reside in this neighborhood, where you’ve been living for a very long time,” he says. “How do we ensure that our seniors continue to remain housed and not become a burden to their kids or loved ones?”

Dantes Partners has been made its vision pencil, even while restricting tenant incomes to no more than 50% to 60% of area median income (AMI).

“We have done approximately 500 plus units of seniors housing, deals in the DC area alone, and all of them have been affordable housing,” says Binitie.

In 2020, Dantes Partners, with Delta Housing Corporation of the District of Columbia and Gilbane Development Company opened Delta Towers, in Washington, DC. The 179-unit, 100% affordable apartment building is leased to residents 55 years and older. The project received $23.3 million in financing from the Department of Housing and Community Development; and $30.4 million in equity raised from low-income housing tax credit (LIHTC) allocations and tax-exempt bonds from the DC Housing Finance Agency.

Binitie has recently opened an office in Bedford-Stuyvesant, Brooklyn, where he stays while working to expand his company’s properties in New York.

Climate Change Initiatives Could Help Housing

On January 20, 2021, the US rejoined the Paris Agreement, an accord to limit greenhouse gas emissions to reduce global warming. Nearly 200 countries have signed on to the treaty. Real estate plays a role in that fossil-fuel combustion from residential and commercial buildings amounted to roughly 29% of US greenhouse gas emissions, according to a 2018 Center for Climate and Energy Solutions report. 

Sozio surmises President Joe Biden could incentivize making buildings more sustainable as part of his plans for a major infrastructure bill. Adding to affordable housing finance techniques, developers like Binitie might also be able to leverage future green programs, to advance additional social goals with seniors housing.