Will There Be a Senior Housing Shortage? Looking Into the Future

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During the worst of the COVID-19 outbreak in 2020, seniors dramatically slowed the rate at which they moved into senior housing facilities. Occupancy has not returned to pre-pandemic levels, but most operators expect occupancy rates to make a full recovery by 2024.

An April 2023 survey of senior housing and nursing home operators found that the pace of move-ins is accelerating. Independent living, assisted living, and memory care facilities all reported growing rates of senior move-ins. Nursing homes also saw more move-ins, although not at the same pace. 

Move-ins in senior housing facilities other than nursing homes began to increase in March after relatively stagnant rates from mid-December 2022 through February 2023. Nursing home move-ins were stagnant in February and March but increased at an accelerated pace from mid-December 2022 to mid-January 2023.

Staff Shortages in Senior Housing Operations

As older adults return to the senior housing market, jobs are opening for nurses, aides, and caregivers. Unfortunately, housing providers are having difficulty filling those positions in a tight job market.

The April survey found that most operators are struggling to fill vacant positions. About 90% of facilities were experiencing staff shortages. Operators reported high staff turnover and labor shortages as barriers to maintaining a full roster of employees.

Staff shortages are more severe in some facilities than in others. More than half of all facilities were unable to fill 10% of their vacant full-time positions. About 12% of operators reported that a fourth of their full-time positions were vacant.

When consumers look for a senior housing facility, they should inquire about staffing levels. Trained staff are particularly important in assisted living, memory care, and skilled nursing facilities. The level of care that residents receive is a function of the number of nurses, aides, and care providers who can attend to their needs.

Supply and Demand

The demand for senior housing will only increase as the nation ages. The demand for senior housing may increase by as much as 50% by 2040.

Demand is growing at a faster rate than the supply of senior housing. About 83% of available units are currently occupied. When vacant units in existing facilities are fully occupied, demand will outstrip supply. The traditional rules of economics tell us that the price of senior housing will rise significantly when that happens.

Operators attribute the slow development of new senior housing units to high interest rates charged by commercial lenders. In an industry that often operates with low profit margins, any increase in the cost of serving debt may discourage operators from developing new facilities.

Meeting Senior Housing Challenges

If the supply of senior housing is insufficient to meet demand, seniors who have substantial assets may displace older residents who have accumulated less wealth. One industry analyst observes dthat providers are “going after the high-end clients” with amenity-rich facilities that serve the wealthiest 10% of retirees.

Creating affordable housing for middle-income seniors will be a priority in the coming decades. Providers will need to find less expensive ways to build housing. They will also need to develop innovative ways to attract and retain employees. Making workplaces more attractive to staff sends a message that the facility cares about its employees as much as its clients. 

Attracting skilled staff members who are dedicated to their work is already difficult in a field with a low pay scale and difficult working conditions. Caregivers deserve higher wages, supportive training, and a safe working environment. Assisted-living facilities and nursing homes cannot deliver quality services without satisfied staff members. 

Meeting Staffing Challenges

Retaining older caregivers is a starting point. Skilled staff members may be more inclined to delay retirement if they are offered flexible hours and part-time employment. Longer unpaid vacations and shorter hours may help facilities retain experienced caregivers without substantially increasing costs.

Employee development programs might recruit and train students as they graduate from high school. Allowing them to work in part-time positions as they pursue a two-year or four-year degree in relevant fields, coupled with the promise of full-time employment upon graduation, might assure a continuing influx of loyal employees who view caregiving as a career path.

Increasing wages and benefits without substantially increasing prices paid by consumers might be the industry’s greatest challenge. Providers could soon benefit from advances in technology that will allow staff members to work more efficiently. Nurses who are burdened with paperwork may be able to devote more time to patient care by using apps that record vital signs and track medications. A scheduling app on a busy aide’s smartphone can assure that important tasks are prioritized and that resident needs are not overlooked.

No single approach will assure adequate senior housing options for all aging adults. Advances in medical care and technology may allow more seniors to remain at home. Changes in the law may encourage adult children to build accessory dwelling units so their parents will have a place to live. The federal or state governments may decide to subsidize the development of assisted-living services that target low- or middle-income seniors. Meeting the senior housing challenge will require creative thinking within the industry, government, and families of older adults.

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