Wednesday, February 3, 2016

Seniors Housing And The Age Of Irrational Exuberance…

Seniors Housing And The Age Of Irrational Exuberance…

Are we looking at senior housing bubble? (Photo courtesy the fine folks at Wikimedia Commons.)
Are seniors housing investors in for a real shock? (Photo courtesy of the fine folks at Wikimedia Commons.)
Good morning, ProviderNation. Irving Stackpole is a man who is hard to impress. Stackpole, a veteran long term and post-acute care analyst who runs his own consulting firm in Boston, has already played Eeyore on providers’ chances in a bundled payment world, but earlier this week, he rang a fire bell in the night for the whole seniors housing sector.
This time playing Cassandra to the chorus, Stackpole comes right out and says, “Investors should be worried about oversupply” (emphasis, italics—and underline—all his).
“What’s amazing is the lack of caution,” Stackpole marvels, “despite the overall signs in the markets, and the devil-may-care attitude of some investors and developers. This may seem a troublesome detail, but occupancies are declining in most marketplace areas. The decline in occupancy isn’t because sales and marketing have collectively fallen asleep across the USA, it’s because the market for age-qualified individuals is declining.”
Demography As Destiny
For Stackpole, demography is destiny.
“From 1925 to 1945, birth rates in this country, and many parts of the world, plummeted due in large measure to the Great Depression and war,” he says. “These are the lowest birth rate years on record in the United States.”
That’s the very cohort, Stackpole says, that’s hitting America’s assisted living centers right now.
Now, Paul A. Samuelson famously disposed of stock viziers by pointing out that the market had correctly predicted “nine of the last five recessions.”
Irrational Exuberance
But those of us who’ve grown up in what might someday be called The Age of Irrational Exuberance have no right to ignore Stackpole’s warnings. That’s partly because he’s not the only one worried about oversupply.
But that’s also because “seniors housing,” as a sector of the economy, is only in its birth stages. (In 2009, for instance, not one of the nation’s largest real estate investment trusts bothered with seniors housing; today, three out of the top five do.)
Additionally, boosters have been arguing for at least a couple of years that seniors housing stock is undervalued. Yet the stocks remain stable, or even “disappointing,” and, in some cases, companies are under increasing pressure to sell.
The Danes Are Coming
Another reason to heed Stackpole is that he—like so many charming, sophisticated, and otherwise awesome observers—has his eye on the international dimensions of long term and post-acute care.
So it’s worth noting that the Danish invasion has begun.
On Tuesday, Ry, Denmark-based Pressalit Care announced that its height-adjustable toilet had won cUPC approval for the U.S. and Canada. cUPC is the Universal Plumbing Code. The announcement comes barely a week after a delegation of intrepid Americans traveled to Denmark to tour its long term and post-acute care sector; they returned with tales more wondrous than the Arabian Nights.
Bill Myers is Provider’s senior editor. Email him Follow him on Twitter, @ProviderMyers.


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