Volume
2 / Number 1
Baby
Boomers Come of Age: Demand Soaring for Senior Housing
BACKGROUND
Real estate supply responses typically lag changing demographic patterns.
The situation with senior housing is a timely example, where an aging
population is creating significant gaps between demand and supply.
Here, the aging trend is complicated by the fact that the housing
needs in senior market segments are different from the general population
and even differ between senior age segments. Needs also tend to differ
between geographic markets.
We recently studied elderly housing needs in the West Los Angeles/Southbay market.
Currently, the trend in this market is toward independent-type units which includes
apartments and independent living facilities (central dining). However, the housing
need will eventually shift toward assisted-care and skilled-nursing facilities.
DEMOGRAPHIC TRENDS
 In analyzing demographic patterns of the West Los Angeles/ Southbay market, we
found the trend to be similar to other markets we have surveyed over the past
five years.
Exhibit 1 clearly shows that the driving force of population growth for the past
decade in this market has been the baby boomer group (age 45-54), followed by
the target population of 55 years and older. The 44 and under groups had a growth
rate of less than 1% during this period. The key future trend, however, is that
the growth rate of the 55-up group is rising at a very rapid pace and will eventually
exceed the growth rate of the 45-54 age group. This trend will have significant
implications for the demand of a variety of senior housing configurations.
Within the West Los Angeles/Southbay market area, we projected total demand for
senior rental units to increase from 1,550 units in 2002 to 4,107 by 2005.
MARKET SUPPLY AND DEMAND
 On the supply side, we identified 22 senior projects of various configurations
with a combined total of 2,314 units within the subject market. Overall vacancy
is 1% and typical waiting lists range from three to five years. To estimate future
supply additions, we conducted telephone interviews with the building/planning
departments as well as housing departments of the various cities within the market
area. No new or proposed projects were identified. Exhibit 2 illustrates the
pace at which net demand is projected to grow in this market over the next few
years.
CONCLUSIONS
Our study points to a growing unmet demand for senior rentals in the West Los
Angeles/Southbay market, a trend that is commonplace throughout California and
Nevada. This demand trend has obvious implications for the housing design and
construction in this market in both the near and long term.
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ADDITIONAL
MARKET MICROSCOPE ISSUES
Volume
1, Number 1
Volume 1, Number 2
Volume 3, Number 1
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