Senior status: Is there a bubble in the senior housing market?
“Whenever you find yourself on the side of the majority, it is time to pause and reflect.” — Mark Twain
Like other commercial real estate property types, the senior housing and care market is hot. Transaction volumes are near record-high levels, and pricing is close to a cyclical peak. Institutional interest in the sector is growing, developers from other property types are actively building senior housing pipelines, and the cadre of capital providers continues to expand. In addition, today’s low interest-rate environment is fueling activity as high relative investment returns draw investor interest, and the cost of capital for both acquisition and development is historically low.
As a result of these trends, “Are we in a bubble?” is being asked frequently. While that question is answered easily in hindsight, it is not as easy to answer in foresight — unfortunately.
An active transaction market
Favorable market fund