Senior Housing – Middle Market Ignored?

Times they are a changing, JCH Senior Housing Investment Brokerage posted a blog back in 2017 talking about the current construction cycle ignoring the middle market.

Assisted Living, Memory Care and Independent Living facility operators and developers have finally begun to recognize that housing middle to low-income residents is going to be an issue in newly constructed facilities.  The senior housing industry is now in full swing in trying to find solutions to serve the middle market.  Smart senior housing investors are realizing that the middle market is a great opportunity just waiting to be filled.

Senior housing facilities, including assisted living and memory care, are typically considered a “private pay model”.  The average cost in assisted living facilities averages between $4,500 – $8,000 per month. Assisted living facilities serving the middle-class market typically charge $2,500-$3,500 per month.

Middle Market Residents – defined

Believe it or not, annual income for middle market senior housing residents is $60,000 per year.  Teachers, firefighters, government workers and nurses fall into this category.  The middle -class market in the senior housing industry tends to serve affordable and low-income residents.  Recent studies show that the average “baby boomer” entering assisted living, memory care or skilled nursing facilities in the next 15-20 years will fall into this category.

Seniors pay for care through lifelong investments, including 401K, real estate or traditional savings accounts. Both high-and middle-income seniors have lifelong investments that will be used to pay for care. The low-income senior typically receives Medicaid.  Seniors receiving federal aid have little to no net worth, these seniors are often placed in facilities that operate specifically on government subsidies.

Possible Solutions

More and more investors, and operators in the senior housing sector are beginning to see that it is possible to make profits while serving the middle market resident.  How you ask? Operators of assisted living, memory care and independent living should consider purchasing older existing facilities. Investing in minor renovations turn these senior housing investments into perfect options for the middle market.  Developers are purchasing affordable land away from cities while not compromising on population density and building assisted living and memory care facilities that are designed with the middle-income residents in mind.

Senior housing is a need driven industry that will always be required.  People are living longer than previous generations and will inevitably need assisted living, memory care or skilled nursing facilities at some point in their future.  Smart investors are recognizing that most of the senior population falls into the middle market segment and will provide independent, assisted living or memory care options that attract them to their facilities.

Navigate the Senior Housing Industry with the JCH Group

The JCH Senior Housing Investment Brokerage is the leading brokerage for healthcare properties. Developers and operators alike depend on our senior housing investment specialists to navigate the tough terrain of the senior housing industry.

To find your perfect opportunity in the middle market, contact one of our investment specialists Jim Hazzard , [email protected] 714-463-1677 or Cindy Hazzard, [email protected] 714-463-1672.

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