SEATTLE, April 20, 2016 /PRNewswire/ -- A Place for Mom® (www.APlaceforMom.com), the nation's largest senior living referral service, today released findings from its National Senior Living Cost Index demonstrating a 2.7 percent increase in annual costs in the United States (U.S.) across three primary senior living categories: Independent Living, Assisted Living and Memory Care. Seniors at median are paying $99 more per month towards senior living expenses compared to 2014, with people living in Southern states ($125/month) and Western states ($90/month) facing the greatest increase in growth (4 percent and 2.7 percent, respectively).
Although the median cost of senior living is on the rise (2.7 percent), it is still well below the median growth rate of the national housing market from 2014 to 2015 (7 percent according to Redfin, a national real estate brokerage company). A Place for Mom also reports that seniors are waiting longer to move into senior living and people aged 84 or older making the transition increased by 3 percent between 2013 and 2015. This fact creates higher acuity needs once seniors make the move, resulting in a higher general spend by the consumer.
"With 40 million people aged over 65 living in the U.S., representing nearly 15 percent of the population, A Place for Mom is releasing this information to help families and seniors plan for the future," said Charlie Severn, vice president of brand marketing at APlaceforMom.com. "Each year, A Place for Mom's local Advisor network refers more than 200,000 families to senior living communities across the country. Most of the families we work with do not understand the true cost of senior living or the types of care available, and providing this information allows them to plan for the future and can lead to better outcomes for seniors needing living solutions down the road."
New Planning Tool
A Place for Mom today also unveiled a new, interactive planning tool hosted on its website that allows families to access the information within the National Senior Living Cost Index to help plan for future senior living costs. Using state-of-the-art statistical methods and A Place for Mom's massive database of senior housing referrals, the new tool allows families to map and rank senior living costs by county, state and region, as well as to see year-over-year and multi-year trends in senior living costs.
Developed in partnership with Dr. Matthew Harris, assistant professor of economics at the University of Tennessee, the National Senior Living Cost Index tracks transactional data collected by A Place for Mom between consumers and senior living communities across the U.S. from 2012-2015, organizing it across four primary regions of the nation as defined by the U.S. Census Bureau. A Place for Mom is the only organization within the industry tracking what consumers actually pay for rent and care costs, and the transactional data included within the index is the first of its kind available to the public. The National Senior Living Cost Index is a representative sample of A Place for Mom's overall referrals for families, focusing on monthly rent and care data collected for more than 10,000 senior living communities over the five-year tracking period.
National Senior Living Cost Index Findings
Cost data collected for the three primary senior living categories – Independent Living, Assisted Living, and Memory Care – includes a number of different expenses. Independent Living only includes rent, meals and other recurring monthly charges (as Independent Living does not include any care costs or assistance for the residence), whereas Assisted Living and Memory Care costs include the resident's assessed care charges in addition to rent, meals and other recurring monthly charges.
Chart 1 depicts the national and regional median of senior living costs for 2015 in the three primary senior living categories.
Chart 2 is an overview of the annual year-over-year percentage of cost changes in senior living, nationally and regionally, from January 2012 – December 2015 for the three primary senior living categories.
Explaining the Tends
As with most of the major industries in the U.S., the recent recession affected senior living and costs dipped as the country's economy shrunk, property values fell, and consumers had less disposable income. Senior living costs are now growing and rising fast as the economy continues to recover and expand.
Following are insights into the specific trends found in the new year-over-year data:
- The increase of senior living expenses from 2014 to 2015 is outpacing inflation across all regions of the country (1.5x faster than core inflation).
- Costs are rising fastest in the Southern region (4 percent) and Western region (2.7 percent) of the U.S. from 2014-2015, where the recession hit hardest and the biggest downturn in property values occurred.
- Many people sell a home prior to moving into a senior living community. Home prices are rising faster (7 percent) than senior housing costs (2.3 percent) from 2014-2015, meaning now may be a good time to sell a property.
Cost trends for each type of the primary senior living categories A Place for Mom tracks vary. Following are insights into the specific trends, per senior living community type since 2014:
- The recession hit Independent Living communities the hardest, which A Place for Mom speculates is because seniors delayed selling homes to prevent an investment loss on properties. As the economy improved, property values started to bounce back, correlating with the rise of Independent Living costs (3 percent).
- Memory Care was most resilient to the recession, due to the urgent demand and inability to delay the need for this type of housing. These costs have grown steadily for a long time, but there is less evidence that the pace of growth is accelerating (.8 percent increase year-over-year since 2012).
- Assisted Living cost trends are less clear. A Place for Mom hypothesizes that the greater urgency of assisted-living demand made it more resilient to the recession; however, costs in this category are rising faster now than in 2012 or 2013.
Metropolitan Areas and Cities
The Senior Living Cost Index includes median charges for metropolitan areas and cities. These small-area estimates are based on an econometric model that combines move-in charges with data on income and people aged 55+ from the U.S. Census. By combining move-in charges with demographic data, A Place for Mom is able to glean both the median and range of costs even in areas where there is little data.
Washington, Boston and New York are the top three most expensive metros for senior living. Senior living costs vary in predictable ways within metros, as well. For example, median monthly Assisted Living costs in Manhattan ($5.5K in 2014 and 2015) are 9 percent higher than the metro median, while the Bronx ($4.2K) is 15 percent lower in comparison.
Chart 3 is an overview of the most and least expensive cities for senior living in the 15 top designated market areas in the U.S. This data along with the city and metro level data allows consumers to research and plan for geographies that may be more affordable.
"A Place for Mom has produced an instructive analysis of the changing costs of senior living from 2011-2015," said Dr. Matthew Harris, assistant professor of economics at the University of Tennessee. "Whereas other, also valuable, cost of care estimates rely on list prices, A Place for Mom's analysis uses actual rents paid and care charges. As with all data sources, there are certain caveats and limitations. However, the information from the National Senior Living Cost Index provides useful insight into emerging trends within the senior living industry."
About A Place for Mom
A Place for Mom, Inc. is North America's largest senior living referral service with more than 400 senior living Advisors providing resources and personalized assistance in finding senior living options. A Place for Mom works with a nationwide network of over 17,000 providers to help families find options based on a loved one's stated needs, preferences and budget. This may include independent senior housing, home care, residential care homes, assisted living communities and specialized Alzheimer's memory care. The service is offered at no charge to families as providers pay a fee to Place for Mom. For more information, visit www.aplaceformom.com, call 1-877-311-6099 or visit one of Place for Mom 's social networks at Twitter, Facebook, Google +, Senior Living Blog and Pinterest.
About the Data
The Senior Living Cost Index is based on actual rent and care charges collected from a sample of A Place for Mom move-ins (nearly 100,000 move-ins were used in the analysis) from 2012 - 2015. National and regional median costs and growth estimates are based on communities with at least one move-in for a given care type two years in a row. The index reports the median cost and year-over-year changes across communities based on their annual median move-in charges for each care type.
City, metro and state estimates are based on an econometric model of inflation-adjusted move-in charges (in 2015 dollars) during 2014 and 2015. Estimates in zip codes with few move-ins borrow information about costs from other zip codes with either similar median household income or geographic proximity. Cost estimates in each location are a weighted average of zip code-level estimates. Zip code weights are based on 2014 American Community Survey population counts of persons over age 55.
Texas and Oklahoma estimates are unavailable, as APFM does not collect monthly care and rent charges due to state regulations.
SOURCE A Place for Mom