Study shows income level is not a factor in interest in seniors housing, but customizable options are
By Margaret Wylde
Much of the work in the seniors housing industry focuses on up-scale products, but that focus excludes the majority of 75+ households. The lower-middle income market for those 75+ years of age is 320 percent larger than the upper-middle income market.
In March, ProMatura completed a pilot study of 344 of these lower-middle income households to learn their interest and propensity to live in an independent living community. Specifically, we measured who was interested in a rental apartment community that provided convenience services (dining, housekeeping and transportation) as well as social opportunities.
The survey did not use industry jargon, but instead used photographs of sample buildings and apartments, basic common community areas, a motor coach, dining area, floor plans and descriptions of the services that might be available.
The respondents included 344 households headed by someone over 70 years of age whose household income was in the lower-middle income range for the metropolitan market area where they lived (specifically Baltimore, Chicago, Houston and Los Angeles). The respondents’ incomes were above the level that would qualify them for subsidized housing but below the median household income. This resulted in income ranges of $30,000 to $55,000 in Houston; $30,000 to $60,000 in Chicago; and $35,000 to $70,000 in Baltimore and Los Angeles.
Devising a methodology
The process involved showing each respondent descriptions of three apartments at a time — including services, amenities and price — and asking which they would rent for the price listed. Each respondent was shown a total of 45 apartment descriptions, three at a time. If they would not rent any of the three, they checked “none.”
Attributes that changed from description to description included: six floor plans including one with two private suites and shared kitchen and living areas; three different sizes of each floor plan; three patio or deck configurations; storage options; five different meal plans; no services or combinations of housekeeping and transportation; amenities such as community living room, multi-purpose area, library, fitness center, outdoor pool and patios in various combinations; and payment plans of monthly rental or paying a non-refundable, upfront fee to owe a lower rent per month. The rental fee was determined by the elements included in each description. Additionally, to determine elasticity of demand by price, each apartment was tested at four price levels.
After the respondents viewed all of the information and prices, they indicated their likelihood of moving to a community similar to the
one described, if they could find the apartment, price and location that they liked.
The study revealed that 2 percent of respondents were very likely to move to a community, 17 percent were likely, 41 percent were unsure and 40 percent were unlikely or very unlikely. These percentages match what we have seen in dozens of studies of higher-income households.
What’s the key takeaway?
Households that were likely or very likely to rent a residence appeared to look closely at the apartments, options, services and amenities they could afford. They were significantly more likely to choose a smaller size of the apartment, and to forego some of the optional features such as a deck or patio, the included meal plans, housekeeping and transportation.
In other words: They determined what they were willing to pay for.
Surprisingly, those likely to rent did not differ from those unlikely to rent in their ages, economic situation, marital status or health.
• The respondents in the 70-to-75 age group were as likely to rent as those in the 80+ age group.
• Those with the lowest incomes, home values and net worth were as likely to say they would rent in independent living as those with the most assets, but they chose smaller apartments, and fewer amenities and services.
• Married couples were as likely to move to the community as those who were single.
• Those likely to rent did not differ from those unlikely to rent in their health status, limitations in daily activities or the use of home healthcare services.
The primary differences between those likely to rent and those unlikely to rent were their attitudes relative to being around other people. Those likely to move were significantly more likely to say they enjoy participating in group events and activities, would rather eat a meal with strangers than eat by themselves, and are a “people person.”
Appealing to those who don’t want company
Knowing your prospects, identifying what they want and finding the amount they are willing to pay is fundamental to creating communities that will provide satisfaction and sense of feeling at home. Communities that match what customers want will enjoy a more robust sales velocity, better ROI and happier residents.
The results of this preliminary research suggests we may be able to attract new customers to age-qualified housing by providing optional services and a variety of apartment options that will help reduce costs.
Those who have the highest satisfaction in seniors housing communities — and who are most likely to move in — are self-described “people” people. Unfortunately, just 19 percent of respondents strongly agreed they are a “people person,” 12 percent strongly agreed they enjoy participating in group activities and a mere 3 percent strongly agreed they would rather eat a meal with strangers than by themselves.
We need to also study how we can develop communities that will entice people who do not want to live in a communal environment. In a previous study for ASHA we identified that 19 percent of the individuals who moved to independent living had moved from their original home to an apartment, and only moved to independent living when they needed some assistance. Can we capture a larger market with fewer activities and group events, and services that are a la carte or that can be added when needed?
A detailed article from this study will be available in the upcoming issue of the NIC Seniors Housing & Care Journal.
Dr. Margaret Wylde is CEO of Promatura Group, a market research and advisory
firm specializing in consumers over 50 years of age, along with their housing, services, consumer projects, customer service, marketing and sales needs.