Senior housing has quietly become the hottest play in Canada’s real estate market, but for anyone who wants to actually live in one, the situation is looking a bit grim.
Driving the news: Senior housing has been the best-performing real estate sector on the TSX this year, with shares of the three top senior home companies climbing between 19% and 21% on the year — all handily beating out broader real estate holdings.
- The driving factor for the rally has been how tight senior home supply has become relative to Canada’s aging population.
- In Ontario, wait-lists for long-term care homes in the province have already doubled over the past decade.
Why it matters: A sector that’s now an investing bright spot could quickly become a serious social and economic problem. With nearly a quarter of the population expected to be 65 or older in the next five years, Canadian seniors will be facing a major housing supply crunch.
- To meet demand, Canada will need an estimated 200,000 new suites in the next decade. Currently, fewer than 10,000 are under construction.
- Starts will likely stay low. Cushman & Wakefield says the cost of building a new retirement home has effectively doubled since 2020, thanks to higher building expenses and interest rates.
Bottom line: Without a massive building push, experts say demand will keep outpacing supply, likely pushing rents higher and leaving many seniors without affordable housing options.—LA