The Industry Today
As the economy begins to shift gears from dismal to slightly improved, the seniors’ housing industry sees some reason for hope. Senior housing valuations may have decreased 20-25% from peak to trough, but this is significantly better than overall commercial real estate – like offices or hotels – which have had to rely on commercial mortgage-backed securities for permanent, take-out financing and whose valuations have decreased by 40%. Economic conditions today are nowhere as severe as the “Great Recession” the country experienced from September 2008 to March 2009, but the continuing economic downturn has been clearly longer and more difficult than many of us have experienced before. And while Ben Bernanke, the Federal Reserve chairman, recently said that the recession was “very likely over,” unemployment shows few signs of improving and foreclosures keep piling up. What little capital is out there is either afraid to make a move or is waiting for some tangible sign that we have bottomed out and the bad times are indeed over. There is still little or no conventional financing and agency financing (Fannie, Freddie & FHA) for refinancing or acquisitions is still hard to get and takes a very long time (if you can get it), even for stabilized properties. There probably won’t be much activity for the balance of the year, but there are probably many in the industry that are gearing up to pounce once conditions improve and opportunities arise.
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