Last week’s NIC conference displayed the growing divergence of opinion on the state of the seniors housing and care market.
A lot of people have asked me what I thought about the recent NIC conference in Chicago. Well, I have been covering the seniors housing and care sector for 30 years, I have attended all 27 fall conferences, but never have I heard such divergent opinions regarding the state of the market as I did last week.
On the one side, you have those who are hoarding their cash, or raising new money, waiting for the market to take a plunge so they can take advantage of cheap prices. Most of these people have been around for a while, and like me, let their historical perspective influence their current opinions.
On the other side were those people who are buying or developing, sometimes both, who see interest rates staying low, capital remaining abundant, and demographics doing nothing but making their investment case over the next 10 to 20, or even 30 years. Some believe demand for their product will double by 2030, and with that, comes safety for their investments or loans.
So who’s right? I think it will be a good business for decades to come. But it will change, and while I see the number of age-qualified people doubling, that does not mean actual demand will double, for a lot of reasons. We are in our eighth year of a bull market, a record bull market with record prices. But do I see average SNF prices hitting $150,000 per bed and assisted living averaging $300,000 per unit in the next five to 10 years? No. Do I see an imminent crash? No to that as well. But I do see a lot of change and disruption coming in the 2020s. It is just difficult to predict what the impact will be on values, and how the sector adapts to the changes.
Despite a study that recently came out suggesting that Millennials may soon be filling the growing nursing shortage, concerns over labor were on most attendees’ minds at the conference, as it should. Supply, cost and quality of labor all contributed to their concerns, and while the industry can’t do much about cost, it can certainly do something about the supply and quality. That is training and marketing, and while this is beginning, it is not enough to deal with the demand for trained staffing that will only grow for years to come. This is my take.
