Senior Living Business Interactive: Simple Steps to Perfection- Achieving Optimum Occupancy and Cash Flow
A lot has been written and said about the economy and its impact on CCRC occupancy over the last five years; but we’re pleased to report that the downward trend that began in 2007 started to level off in 2010 and, today, is actually beginning to trend upward.
Throughout the last three years, Spectrum Consultants, Inc., based in Gastonia, North Carolina, has done extensive research on this topic—by conducting focus groups in 29 of its markets, for example—and the results show shifts in the way prospective seniors across the country are thinking, according to Mike Wallace, Vice President of Sales and Marketing.
First, the research indicates a bifurcated market. “Affluent” households age 75+—1.1 million people (9.4% of the market) with an annual income for $75,000 or more and a net worth of at least $1 million—report little-to-no impact due to the economy. They have enough wealth to take the hit on their home value and investments and still maintain their lifestyle. These people are the best candidates for moving to a CCRC.
“Upper middle-income” house-holds age 75+—1.4 million people (11.2% of the market) with an annual income of less than $75,000 and a net worth between $500,000 and $1 million—experienced the biggest economic challenge and are cutting back on their entertainment, eating out less, eliminating or curtailing vacation plans, even changing their diet. And with the high cost of gas, they’re driving less. This group is also the most vulnerable with regard to the decrease in home values, as they’ve counted on the home as a significant contributor to their retirement funds.
While no seniors in the focus groups felt that their incomes or home values would return to 2007 levels, the most recent groups reported that they expect home values to increase to an “acceptable” level—defined by Spectrum as a reasonable price for which they’d sell their house—within the next one to two years. “Most seniors accept that their home values were significantly inflated [pre-007] and, in the last six months, have begun to adjust their mindset,” said Wallace.
Interestingly, focus group participants said they preferred not-for-profitproviders and were more concerned with price than value. Also, the “upper-middle income” group has been shifting to a smaller residence size—the one bedroom/den style becoming the most popular unit for this group (down from two-bedroom residences). The “affluent” group still prefers large, two-bedroom/two-bath residences.
The financial strength of the sponsor continues to be a significant issue, and market longevity, reputation.........Want to read more? Click here for a free trial to Senior Living Business Interactive and download the current issue today