A Place for Mom (APFM), the largest senior housing referral service in the country, released the results of its 2018 National Senior Living Cost Index Tuesday morning and found cost growth changed as follows:
- Independent living rates increased 2.6% from 2017 to 2018, bringing median monthly costs to $2,552
- Assisted living costs for seniors declined slightly by 2.4% in the past 12 months, bringing median monthly costs to $3,942
- Memory care costs rose 3.2%, bringing median monthly costs to $5,003
Despite the rise in memory care and independent living, the overall APFM senior living cost index fell for the second straight year, although the decline was less pronounced than in the 2016-2017 time period.
The numbers, which are inclusive of rent plus care, are based on the capture rates of the 300,000 families APFM assists in finding senior housing annually, Vice President of Brand Marketing Charlie Severn told Senior Housing News.
One of the more surprising aspects of the findings was the rate of housing costs were tied closer to inflation, and were lower than the growth rate in health care costs, which increased 5.3% in the past year.
“This represents for consumers that now is a good time to consider senior living because of the value provided,” Severn said.
New construction brings price stability
The ongoing construction boom in senior housing is one of the main factors behind the moderate rate growth. While the building boom has created occupancy pressures for senior living providers, it has been good for consumers from an affordability standpoint.
New data from the National Investment Center for Seniors Housing & Care (NIC) for Q1 2019 revealed the overall occupancy rate remained stable at 88% and construction showed signs of slowing after nearly two years of growth. The surge in new buildings, particularly in assisted living, created a supply-demand imbalance resulting in greater competition for residents, better options for consumers and pricing stability at the market rate, middle market and low-income levels of the senior housing space, Severn told SHN.
“As consumers research this they may be surprised to find pockets they can afford,” he said.
Additionally, APFM broke down growth rates by region, as well as listed growth and median rates in the country’s top metropolitan statistical areas (MSA). The Western U.S. saw the highest rate growth increase at 4.3%, while the Northeast rose 3.1%, the Midwest grew 2.6% and the South saw a 1.5% decline in rate growth.
The Boston metro area overtook New York and San Francisco for highest monthly rates across all care acuities. This was somewhat surprising but makes sense given overall housing market dynamics in these cities, APFM Vice President of Partner Services Sue Johansen told SHN.
A more educated consumer
The baby boomers entering the space are more aware of financial planning and looking at senior living differently from their parents. They understand they need to plan for the move, Severn said.
APFM’s cost index and map tools create a common language for the total market across the care spectrum, and shows consumers what to expect within a given market for a care type, Severn told SHN. The intention is to allow consumers to compare different cities, neighborhoods and within a market for the community that provides the best value.
Consumers and their families are also finding social aspects and care components in their searches they were not aware of, which provide added value for the dollar. APFM asks families their initial budget range to match with communities. The service found families pay between 15% and 20% more than their stated budget.
“When they do tours, they end up finding value in social activities, and are willing to pay more for services,” Severn said.
From a broad-based consumer standpoint, many seniors and their families still struggle with the move. APFM’s statistics show that, of families who make it to the company’s advisers for a consultation, only 50% are referred to communities which are strictly private pay options. The rest need some form of public assistance and APFM helps through its public pay resource guide.
“There is a spectrum of offerings ranging from residential care homes to shared accommodations, which make this more affordable,” Johansen said. “ They need to understand the landscape and separate room/board from the care and seeing where the flexibilities lie.”