Will a Possible Recession Impact Senior Housing?

Questions about a looming recession continue to make headlines as the U.S. economy falters and food, utilities, and other costs skyrocket. The stock market is also down and experts warn the Federal Reserve is “unlikely to tame inflation without pushing the American economy into a recession”, raising eyebrows and questions alike. Furthermore, many companies have initiated hiring freezes, even though job openings are plentiful. While senior living has experienced its fair share of labor challenges and rising costs, industry experts are optimistic for the future. 
Regardless of which side you fall on, the fact of the matter is that a recession is top of mind for many Americans. 
But what does this mean for the senior housing industry? 
As we discussed last month, both occupancy and senior housing demand are bouncing back as development ramps up, thanks to falling lumber prices and hot new markets. Senior housing is largely considered a “recession-proof” industry because assisted living, skilled nursing facilities (SNFs), memory care, and other similar communities are need-driven, but this is of course not 100%. 

Is Senior Living “Recession-Proof”? 

With more and more seniors adopting an active, social lifestyle post-pandemic, its imperative operators, providers, and investors understand and adapt to these shifting expectations. Currently, SNF prices are increasing while assisted living (AL) prices are decreasing, presenting unique investment opportunities. The Sherman & Roylance team currently has several exclusive opportunities for the right buyer - including a 100+ bed active adult community in Upstate New York. 
History repeating itself would be good news for senior housing, as the industry has avoided becoming a casualty of economic turmoil in the past. Again, we must point to continued demand and ongoing development projects as the reason for this. 

Tips to Stay Afloat In the Face of Economic Uncertainty 

To avoid getting caught in a sticky situation, should the economy continue to falter, keep the following in mind:
  • Act now - Pay attention, be proactive, and take precautions to ensure you don’t get caught in a down market. If you are attending the upcoming NIC Fall Conference in Washington D.C., this could be a good time to schedule an appointment with one of our experienced team members to discuss a possible exit strategy
  • Wait it out, but have a plan in place - An exit strategy may not be the right move for everyone, but we encourage you to consider all possibilities and be prepared. For some, now may be a good time to grow or start a portfolio, rather than develop an exit plan. 
  • Economic downturns create opportunities for buyers. 
  • If you are considering selling a facility, do not wait to see if prices dip before getting your asset on the market. 

It’s too early to know what will happen in the coming months, but 72% of economists are predicting a recession by the middle of 2023. To learn more about the current state of the senior housing market or if you have questions about what a possible recession might look like for you, please do not hesitate to contact the Sherman & Roylance team