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Senior housing market on the upswing, prepping for boomers

While the developers of Crystal Spring in Annapolis are struggling to win the community's approval, senior housing developers in other parts of the country are having more luck. Nationwide, the supply of senior housing units has returned to levels not seen since late 2005, before the housing bust and the recession. Better yet, those units are not sitting empty: The 89.8 percent occupancy rate is the best the market has seen since 2008.

Rents are up, as well. And though new construction slowed in the first quarter of 2014, analysts are blaming winter weather rather than a loss of confidence or interest. After all, baby boomers are not getting any younger.

Thanks to baby boomers, senior housing seems like a fairly safe bet for developers looking for new projects. Boomers started turning 65 in 2011. The U.S. Census Bureau figures that the 43.1 million seniors in 2012 will grow to 83.7 million by 2050. We may not be the largest generation anymore -- millennials took the title from us -- but we are going to be around for a long time yet.

The National Investment Center for the Seniors Housing & Care Industry reports that there were 526,144 senior housing units in the 31 largest U.S. metropolitan areas. That's an increase of 1.4 percent over 2013, and the upward trend will continue: The NIC says more than 16,000 new units are under construction.

It is important to remember that there may be half a million senior housing units out there, but they are not half a million luxury apartments in seniors-only high-rises. The term "senior housing" includes all types of facilities that cater specifically to older Americans. There are a few luxury high-rise retirement communities for seniors capable of living independently in the mix, certainly. There are also assisted-living facilities, skilled nursing facilities and facilities for people with dementia.

It is also important to remember that turning 65 does not translate into an immediate move to a senior housing community. The average person entering senior housing right now is over 80.

Source: Bloomberg, "Senior Housing Surplus Seen as Boomers Spur Building Boom," Brian Louis, May 15, 2014

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