Welcome to Senior Housing Unfiltered. I am your host Tod Petty and I will be taking the next 30 minutes to reveal some statistics that will blow you away. You’re not going to want to miss the data I will be sharing today on our show.
Our podcast is being brought to you by Lloyd Jones in beautiful Brickell Bay, Miami, Florida. Lloyd Jones is a world-class real estate investment, development, and management firm with over 40 years’ experience in both the multifamily and senior housing spaces. Visit our website at lloydjonesllc.com to learn more about our team, our expertise, and your future growth opportunities with us.
I want to talk to you today about the analytics, demographics, and psychographics associated with the baby boomer generation: our new customer in senior housing and how we as a country will not have enough senior housing to serve this generation beginning in the very near future. The United States will not have enough senior housing even if every project in the pipeline is completed and every unit becomes full. We will not have enough housing to serve the baby boomer generation beginning in the year 2030.
Right now as I’m speaking into this microphone, there are 46 million seniors age 65 or older currently living in the United States. By 2030, all baby boomers will be included in this demographic group. Every day, 10,000 people in the United States are turning 65 and older. By 2030, we’ll truly have a massive shortage of appropriate senior housing. Every community, every unit, and every project coming out of the ground right now will be full.
As I said earlier, there is not enough housing coming out of the ground right now to meet the demand of the baby boomers coming online in 2030. That is very exciting from a growth standpoint and creates opportunities for everyone in our industry. The demographics I just cited reveal a wave of unprecedented, un-met demand coming soon. The demand for senior housing is here, but this question still remains: Will the baby boomer generation seek out the traditional existing housing product on every corner in America? The answer is resounding no. The baby boomers will demand a new model to serve them.
I want to share with you a bifurcation of senior housing need that has evolved in the last few years in the senior housing space. By bifurcation, I mean the senior housing needs of the older adult. Their desires and their wants have been dividing quite substantially into two branches, or parts, over the last few years. I want to talk about these two different groups of seniors with two different sets of needs and why the amenities demanded associated with these needs are going to change rapidly. This transition is beginning now and we must be prepared.
First let’s look at the older adult over the age of 85. Here are some salient facts you need to know about this over 85 group. The average weighted age moving into assisted living today is 86.7 years of age, and that is rising by 80 basis points every year. So think next year we’re 87 years of age. And then the next year after we’re at 88 and so on. So every year that goes by, the average age moving into assisted living is increasing by almost a year.
According to the Alzheimer’s Association, one in two adults over the age of 85 have dementia and one in three adults over the age of 85 will experience a positive diagnosis of Alzheimer’s. This means that the person moving into assisted living, the average person, is either demented or more likely has Alzheimer’s. The average length of stay has steadily decreased over the last 10 years because seniors are not moving into senior housing until they must. That makes sense.
Usually, the driving factors that cause this are memory loss, co-morbidities, complex medication supervision, or end-of-life care. The average length of stay has also decreased from 24 to 36 months a decade ago to 12 to 24 months today. Why is the length of stay decreasing in assisted living? Because of the following reasons:
- Baby boomers are waiting to move in at the last minute when they no longer can manage their decline at home. They are actively dying and now need healthcare supportive services.
- Federal and state regulations are allowing older adults to age in place. So, assisted living now includes complex medication management, diabetic testing, insulin management, two-person assist, and respiratory services delivery. All these things years ago would had to have been done in a skilled nursing setting. The result is a beautiful place to live while you’re receiving healthcare services and assistance with daily living. The regulators do not want residents moving into skilled nursing communities anymore primarily because they don’t want them to become beneficiaries of the state.
The legislators want to keep beneficiaries out of skilled nursing and off the burden of the taxpayers. I can assure you I’ll be moving into assisted living when I need these services, when I need complex medication management, when I need diabetic testing and insulin management, when I’m demented, when I need two-person assist. But I’m not going to move in until I need these services. So, newsflash, baby boomers over 85 are not looking to have a shot of whiskey at 4:00 PM, smoke a cigar and talk about the good old days.
In this setting, where they find themselves in the sunset of their lives, baby boomers are wanting to feel love from the staff. Medication and ADL need attended to. Companionship and connection with others going through their final journey of their lives is needed. The baby boomer wants a safe and secure place when they are declining. Even though we built lots of amenities in the new properties, our new residents are declining and they’re declining more every year.
Our deliverables should be geared to compassionate care, getting the resident their medicine on time, facilitating the reunification of the resident to their families when possible, and creating a team in the community to make the resident comfortable. What I’ve described is the first of two branches, the one of two. The post-COVID-19 assisted living model will be healthcare-focused and less amenity-focused because the needs for the 85-year-old client will be healthcare services. Whoever can deliver the service in a beautiful setting wins the day, that’s why we’re seeing people in beautiful settings not being able to care for the residents.
Now let’s turn our focus on the second branch of the bifurcation of senior needs, which is the under 85 years of age client. As I discussed previously, this big group of seniors under the age of 85 who are not demented are not going to move into the over 85 model under any circumstance until they absolutely must because of cognitive decline. I want to take a few moments to look at the psychographics of the under 85 resident and what they’re looking for and will want or will demand from their new home.
Let’s just recap real shortly here. The over 85-year-old baby boomer will be declining in health. They’ll be demented. They’ll want a beautiful place to live, but they’ll want love, care, safety, security, and assistance with activities of daily living. They’re going to want more of a healthcare model and they’re going to need it. But the under 85 group, they’re not going there because they don’t need it. So, what is this group of people under 85, say 65 to 84, looking for? They’re aware that they’re aging and for the most part they’re very self-aware.
This group wants and will demand a zero-entry pool. They will want to drink at four o’clock in the afternoon at the bar bistro. They’ll want a one or two bedroom with an office to manage their wealth. They will want a connected life. In fact, you are going to have a move-in in the very near future and have a senior version of the Bumble app that will allow them to connect with people. Here’s why: the assisted living model is not the environment the active adult 75-plus person wants to go to because they don’t want a healthcare service model, they want a non-healthcare model.
The divorce rate for people 65 to 75 is skyrocketing. And the baby boomer is looking for something new. When this group was asked in a recent survey why they are now deciding to divorce after so many years, the response was that they never anticipated being married to the same person as long as they have been. The 65 to 75 group is one of the fastest growing groups on Facebook as well. They realize they’re aging, and their near future may be the last opportunity to take one last bite of the apple.
Remember, this is the Woodstock generation, and they want freedom. Between 70 and 80 years of age, many are experiencing the death of a spouse, or are now moving into a community to manage their wealth from the sale of their house, or want to be close to their grandkids, who represent their connection to relevancy. So, the baby boomer senior will want lots of amenities to stay young, be relevant, age successfully if they can, manage their wealth, and connect with someone for one last shot before they enter the sunset of their lives.
The new model of an active adult 55-plus and the new model of independent living will allow a baby boomer resident to age in place and successfully age until and if cognitive decline takes place and the residents’ needs exceed the ability to meet those needs by the third-party healthcare continuum who will become part of this new active adult community or independent living community. If programming is done correctly, as owners we should realize an average length of stay is exceeding eight years or more because of technology and the connection between communities and the third-party healthcare services being offered in the building are, in many cases, the equivalent of assisted living at a lower cost to our clients.
There are many reasons for that that we won’t cover today. One of those is we have a non-licensed building. Another reason is we don’t have to have a steel building. It could be stick versus steel. Another reason is we don’t have legal regulatory compliance expenses associated with the independent living inactive adult. So there’s a lot of cost-saving development areas that result in a lower rent to the baby boomer client that’s moving in. This will allow them to take remaining disposable income and spend it on the third-party healthcare continuum.
So, think of bringing a pharmacy to the active adult and providing medication that’s connected to the Wi-Fi that delivers them packaged pre-dosed medication three times a day, or Medicare Part B mental health services that anyone over 65 isn’t eligible for for six weeks, or rehab can be brought in so a tenant can rehab in the active adult space, or even care services that can be paid for by the tenant to a third-party provider. The client can pay their rent and the total amount is going to be less than assisted living.
So, this is a real change that’s coming. These are two different models that the industry needs right now. There’s been a lot of debate on what the new model looks like. Well, I think there’s two new models. There’ll be those that enter into the AL memory care world that will be provided with very good healthcare services in beautiful settings. The baby boomers will have the dollars to spend because they’ll be in the sunset of their lives. There’ll be those that are living longer, have a death of a spouse, they’ll have a divorce, they’ll want to manage their wealth and they’ll move to an independent living or active adult care continuum that will allow them to age in place, successfully age with seniors that are still relevant, still manage their businesses, and still try to make a difference in life.
I am very excited about the prospects of the future and senior housing. Lloyd Jones has several of these models in our pipeline. We’ll be glad to share these projects with you in detail in future podcasts. So until we speak next time, this is Tod Petty with Senior Housing Unfiltered wishing you a very good conclusion to your summer, and we’ll see you at the next podcast in August. Godspeed