Seniors housing: Let's make a deal!
With occupancy rates down and rent growth slowing, some private-pay (non-government) senior-housing companies are dangling tasty carrots to get potential renters off the fence and into their communities.
Among the incentives are $500 discounts on the first month's rent or half off the community fees -- nonrefundable "administrative" costs that typically equal one month's rent, or several thousand dollars at some facilities.
For those still scrambling to scrape together the entry fee or fretting over handling the $3,000-a-month rent, some companies are helping with financing solutions. Others kick in moving expenses, says Michael Hargrave, vice president of the data and analysis service of the National Investment Center for the Seniors Housing & Care Industry, or NIC, which tracts such trends.
In California's senior-housing mecca, Palm Desert, some facilities are waiving entry frees, says Rick Johnson of Palm Desert Senior Living. In the summer months, when furnace-like temperatures keep prospective renters away, some companies offer to pay "a few months' rent," Johnson said.
"There are negotiations going on here with the entry fees . . ." said Lynn Shearer, director of community relations at the Fountains at the Carlotta, a Sunrise Community in Palm Desert. At this higher-end facility, fees range from $130,000 to $250,000, so any discount packs a wallop. "In some cases we might upgrade their kitchen counter tops when we refurbish the unit for move-in."
Why the generosity? Occupancy rates in the 31 largest metro areas bottomed out at 89% in the second quarter this year, from 92.8% in the first quarter of 2007, according to NIC. They ticked up a bit, to 89.2%, in the third quarter this year.
Rent growth, which has been steady, also slowed. In the first quarter of 2007 it grew 4.6% from the year before. This year's third quarter posted an anemic 1.8% rise from a year ago. The average base monthly rent for assisted living is $3,518 and $2,631 for independent living, according to NIC.
Also, it's no secret that some seniors who otherwise would be packed and ready to set up house in a communal seniors setting have seen their retirement portfolios deflate like a punctured souffle. Many also are wringing their hands while their current homes sit stubbornly on the market, locking up their moving funds.
Still, senior housing is considered a growth industry, so the tide will rise again, experts say. A decade and a half from now, boomers will bring their own demands to senior-living communities (bring on the city life, hold the golf and tennis). Builders and senior-housing execs will have their hands full. This lull may seem like a cakewalk.