The Silver Tsunami
There are approximately 28,900 assisted living communities with nearly 1 million licensed beds in the United States today. The first cohort of 76 million Baby Boomers will begin to hit the market in 2021. 70% of this entire generation will need long term care at some point in their lives. It is a significant national phenomenon and industry experts call it the Silver Tsunami.
Why Is This Happening?
People are living longer than ever. Many fatal illnesses that used to kill people are easier to fight off today. This is due to improved health care and medical advances.
The Silver Tsunami refers to the fact that in the next 20+ years, the number of people over the age of 65 is set to double. Life expectancy is creeping up and experts believe 110 will be the average age expectancy by 2030. Seniors will soon outnumber children under the age of 5 and create seismic social and economic changes.
Between 2018 to 2025, Washington state is projecting an increase of about 30% for Alzheimer care. Market demand for Adult Family Homes with personalized memory care is only growing and demand is far outstripping supply. More and more homes are reporting wait lists and social workers face a shortage of available beds to discharge seniors. The average monthly cost of assisted living in Seattle today is $5,750/month per resident. With personalized all-inclusive memory care this average goes up further to $6,500/month per resident. The need is strong and will only grow stronger.
The Supply Imbalance
While demand for Adult Family Homes is growing yearly, we are beginning to face a shortage of available providers. Despite the fact that Adult Family Homes are very lucrative businesses (averaging over $400,000/year in gross sales), there is a huge barrier of entry for new operators to come in.
The national average age of a caregiver today is 49 years old. 34% of them are over 65 years old. Many are heading towards retirement and need someone to come in and buy their business and home. The question then is, who will come in and replace these retiring providers?
The answer is the current generation of younger caregiver employees. After a few years of service many are convinced of the huge demand for residential caregiving. They want to start their own business. Unfortunately, their biggest impediment is getting an SBA loan to acquire the business and home.
With the median price of Seattle homes nearing $1M, most caregivers, being hourly employees, do not have sufficient savings for a down payment. Most also do not have prior business experience and represent a high risk profile to banks.
Here we have a Goldilocks moment of real estate investing.
Huge market demand for Adult Family Home services.
Diminishing supply of available providers.
Incoming new providers who want in but lack the financial means.
This is where RAL Holdings come in.