Thanks to lockdowns, move-in restrictions and ongoing low occupancy rates, the senior living sector has been the weakest part of most of the major healthcare real estate investment trusts over the past year.
A Fool Live video posted this week discussed the near-term and long-term outlook for the sector and estimated that it could be several years before senior living makes a full recovery. The nation’s aging population, however, almost guarantees that it will continue to be a sector that will see growth.
“Senior living is a long-tailed growth market; there’s no question about that. The 85-and-older population, which is their bread and butter, is expected to roughly triple over the next 30 years,” said real estate analyst Matt Frankel, CFP. “The question is, how long does this take to come back from, and will all the senior housing operators survive? I’m guessing about a three- to four-year window before [the sector] really returns to pre-pandemic health levels.”
For investors, it’s important to keep the end goal in mind, said Jason Hall, Millionacres contributor and senior housing expert. That means they should focus on what exactly they are looking to gain from an investment.
“If you’re looking at [real estate investment trusts] for income today, stay away from the sector,” Hall said. “But if this is a 20-plus year portfolio, maybe the REITs makes sense because it creates opportunity to buy.”