Senior living is of growing concern to many countries, especially in North America and Europe. It’s not hard to see why. Countries such as the USA, UK, Canada, and Japan are witnessing a rapid increase in the senior population. As the population ages, there are bound to be concerns around living facilities and the need for long term healthcare.
The reality of senior living communities is very different across countries. Some nations have subsidized public health programs, others do not. Assisted living facilities are a growing market in the U.S but not so much in Canada. There is a significant variation in costs, attitudes, and market economics in each of these regions.
For instance, the U.S continues to struggle with excess supply for senior living facilities. With steady growth in the earlier years, the market is now witnessing a slowdown in seniors wishing to move out of their homes. On the other hand, experts predict long term challenges as the baby boomer generation begins to age in the next few years.
Canada’s Aging Population
In Canada, the situation is completely different. The Canadian market is facing the opposite problem: there simply isn’t enough supply to keep up with growing demand. Let’s take a quick look at why demand is growing rapidly in Canada.
Research in demographic trends and census data indicates the senior population in Canada will continue to grow over the next 2 decades. It is estimated that by 2036, people aged 65 and older will make up anywhere from 23% to 25% of the total population, compared to 14% in 2009 and 17.5% in 2019 . That’s a massive increase from 12.3% in the 90s.
If you drill down further, research shows that in 2016, 13% of seniors were aged 85 and older . At this age, seniors are likely to find it difficult to live independently due to medical and cognitive issues. While technological innovation can help, there comes a time when seniors need more assistance to complete daily household activities.
This increase in the aging population is driven partly by the baby boomer generation. The first people in this cohort started aging in 2011. It is projected that one in five Canadians will be aged 65 and older by 2024 . This growth in the aging population creates opportunities and challenges for senior living communities.
Occupancy Rates in Senior Living Communities
The vacancy and capture rates for senior living communities vary significantly across provinces in Canada. In 2017, the Canada Mortgage and Housing Corporation (CMHC) estimated around 258,000 senior housing units across Canada. In the eight years between 2008 and 2017, the supply grew by about 6.9% which appears quite good.
However, the population in the senior segment grew by an average of 21.7% in the decade from 2006 to 2016 . It becomes apparent that the supply has not been keeping up with the demand for a while now. Over the long term, it will become a serious problem if it’s not tackled head-on.
This lack of supply affects the costs of living for seniors too. The average rental cost increased by 4.7% between 2013 and 2017 . It will become increasingly expensive for Canadian seniors to live in such communities going forward.
Senior Living in Ontario
Vacancy rates for Ontario remained somewhat uniform in the latest reports by CMHC. There is a slight difference in vacancy rates for standard and non-standard spaces. The former is defined as spaces where the resident receives less than 1.5 hours of care daily. Non-standard spaces provide at least 1.5 hours of care or more for residents with more intensive health needs.
The vacancy rate for standard spaces dropped from 10.4% to 10.3% in 2019 . Comparatively speaking, the vacancy rates for non-standard spaces is at a record low of 9.9% and has remained largely unchanged.
Growth in the supply of senior living spaces has managed to keep up with demand in Ontario, at approximately 2.4%. This is much better than in many other provinces.
Senior Living in Quebec
The vacancy rates in Quebec have increased in 2019, compared to the previous year. It now stands at 7.2%, up from 6.9% in 2018 . The capture rate refers to the ratio between the number of residents in an age group to the estimated population of the same age group. Usually expressed as a percentage, Quebec leads the other provinces at 18.4%.
The average monthly rent for standard spaces was $1,788 in Quebec. This is substantially better than the same number in Ontario which stands at $3,758. Heavy care spaces in Quebec saw a rise in vacancy rates, up at 5.7% in 2019.
There is a growing need for senior living communities in Canada but regulations regarding property development may prove to be an obstacle.