“New Senior Housing Raises Concerns Supply Will Outpace Demand From Baby Boomers.”
Sourced through Scoop.it from: www.wsj.com
The baby boomers are beginning to increase the demand for healthcare-related products and services for a number of years now. The population of people over 65 years old will only grow as years go by and so will the need for senior housing. Therefore, healthcare REITs are set to grow in the long run.
Although 10,000 baby boomers turn 65 everyday, most will not move to senior facilities right away (if at all). Senior citizens are living longer and better, so a large number of new senior living establishments probably won’t be necessary any time soon. While keeping an eye on REITs, such as Sun Communities and Equity LifeStyle, retired people seem to be setting a new trend as many are moving to manufactured homes.
Builders may have already gotten a little overeager in constructing senior-based living facilities. The fear of a glut of such buildings is becoming a concern, especially in some areas. For example, the Wall Street Journal recently reported that Atlanta, Chicago, and Dallas might already be experiencing oversupply. For these three cities, new units represent more than 10 percent of the existing inventory. It’s probably a good idea to check the locations where the properties are before investing in a healthcare REIT.
Healthcare will always be needed, so this industry should still perform well during economic downturns over the long term. Some of the largest healthcare REITs have weathered the Great Recession quite well. They continued to distribute the same or even increased dividends during that time.
In conclusion, healthcare REITs are investments to hold for the long haul.
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Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.