We’re living through macroeconomic conditions that most people working today haven’t experienced in their professional lives. Inflation is at 8.5 percent, the highest it’s been since 1981. Labor costs rose six percent in March, and the labor shortage remains acute. Meanwhile, supply chain shortages are wreaking havoc on construction projects of all kinds.
Like every other industry, senior housing is feeling the strain. But it is also uniquely positioned to benefit from the current moment. Here’s a look at how that can happen.
At First Glance, Margin Compression Is the Headline
I’m not going to pretend that margin compression isn’t a fear – or a reality – for senior living right now. Wages are going up, and there’s still a worker shortage. Construction costs are through the roof (even though lumber, for example, has fallen from the all-time highs we saw last year). Communities have ongoing PPE and cleaning costs that aren’t going anywhere for a while and weren’t part of the equation pre-pandemic.
Rate increases are inevitable – and many communities have already implemented them. While it’s still early days, we’re seeing positive indicators: despite not-insubstantial increases, occupancy is climbing. Current residents aren’t leaving.
That’s a promising initial sign. What’s even more exciting is the potential this moment holds for senior living, both for short-term growth and for long-term repositioning in the collective imagination. Let’s dig into that.
It’s a Great Time to Sell
We’re now experiencing what Fortune recently dubbed “the mother of all seller’s markets.” Home prices have been rising fast since the start of the pandemic. With inventory still tight and interest rates likely on the upward swing, they continue to rise – and Goldman Sachs predicts that growth will remain strong through this year and slow somewhat in 2023.
In other words, right now is maybe the best-possible time to sell a home and move into a rental. Today’s seniors, who saw housing prices crash when they were getting uncomfortably close to retirement a decade and a half ago, may opportunistically take advantage of high home prices in the super-near term – even if it’s earlier than they were planning to move into senior living.
So how can senior living communities convince this demographic to sell their homes and rent an active adult or independent living unit?
That’s where the big repositioning opportunity comes in.
Tap into and Accelerate the Cultural Attitude Shift around Senior Living
Today’s senior housing landscape is vastly different from what existed in the 1980s – which residents and operators know well. Many outside the industry, though, haven’t yet recognized how different today’s senior living communities are from “the home.”
But that’s starting to change.
One promising indicator was the fact that Florida’s The Villages was the fastest-growing metro area in the last US Census. Another was a recent New Yorker piece that painted the 55-plus Margaritaville communities in a flattering light.
As we’ve mentioned before, active adult is on the rise. Senior living communities of all stripes can capitalize on the larger shift in popular perception that ascension represents to win over a new generation of residents.
Marketing is essential to this effort. Beyond the usual assets that showcase a community’s value props for those comparison shopping among potential communities, there’s an opportunity to create assets showcasing the value of senior living relative to home ownership.
Those include…
- The benefits of downsizing: This is particularly compelling in a time of increasing energy bills.
- Community living: Proximity to other people in a peer group is in itself a huge value-add and can command a premium over multi-family much as student housing does on college campuses.
- The space-for-time tradeoff: Without the endless chores and maintenance of home ownership, seniors in community settings can spend their time doing the things that bring them joy – a feature that’s proven central to the appeal of communities like Margaritaville.
The next 12 to 24 months will present a prime opportunity for senior living to attract a new generation of residents. For insight into specific marketing strategies operators can use to realize that opportunity, get in touch.
An Opportunity to Reshape Perceptions in an Evolving Industry
The last two years have been tumultuous for senior living. As we emerge from the acute phase of the pandemic, there’s evidence to suggest that its upheavals have sparked a larger reckoning – not only with the role of senior living but also the face of retirement.
In this moment of flux, senior housing professionals have a unique opportunity to reshape popular perception of the industry – a hearts and minds campaign with huge potential upside.
