Housing for seniors | Inflation hurts housing additions

The high vacancy rates in private residences for the elderly are a transitory phenomenon, maintains a firm of real estate experts who have just published a report on this segment of the housing market. Worse, a shortage of such accommodation is on the horizon.

Andre Dubuc
The Press

Construction costs and land values ​​are rising faster than seniors’ ability to pay, according to its authors.

In this context, the supply of new residences will be insufficient to keep up with the demand resulting from the expected explosion in the number of seniors, maintains the firm Côté Mercier data service.

“We have members who have put construction projects on ice, even large groups who are questioning themselves and slowing down projects, because there is a limit to the elasticity of rents and the ability to pay seniors,” says Isabelle Nantais, president of the Quebec Association of Residences for Seniors (RQRA), which has 800 residences among its members. The Press contacted her for comment.

M^me Nantes also underlines the issue of the operating costs of a residence, which are also subject to high inflation.

Côté Mercier’s study comes at a time when experts, such as former Minister of Health Réjean Hébert, are calling for the state to devote more resources to home care for clients with loss of autonomy rather than rely mainly on the private network of RPAs.

Quebec indirectly funds RPAs through the home support tax credit. In recent years, the government has also set up direct assistance programs for RPAs, in particular small residences in the regions.

Government assistance has not prevented the closure of more than 400 residences over the past five years.

Concentrated in small residences, the closure movement now seems to be extending to large residences, as evidenced by the change in vocation of the Résidence Mont-Carmel, in downtown Montreal, with 216 units, and that of two of the three towers of Château Beaurivage, on boulevard Gouin Est in Montreal.

From October to December 2021 alone, 18 residences closed their doors, resulting in the disappearance of 822 housing units dedicated to the elderly clientele. For the whole of 2021, the closures wiped out 3,223 specialist accommodation, the report reads. Private residences for seniors in Quebec4^and quarter of 2021, from Côté Mercier data service. The Ministry of Health arrives at substantially the same data on a different schedule.

Towards a deficit of 30,000 places

According to calculations by Côté Mercier, there will be a shortage of some 30,000 places in the retirement home market (RPA) by 2026.

The demand for accommodation in seniors’ residences will grow by 28,000 units by 2026 due to the increase in potential clientele. To this number must be added the 1,800 existing units that are withdrawn from the market on average each year.

On the supply side, 4,500 new units will be delivered in 2022, before the pace drops rapidly. Côté Mercier is postulating the delivery of 7,000 units by 2026. “We are not currently building residences at the level where we should be building them,” says Christian-Pierre Côté, sales director at Côté Mercier.

The firm’s forecast is not lacking in audacity, since the RPA market is currently managing a surplus of inventory, not a shortage. The vacancy rate peaked at 12.8% in 2021, according to the Canada Mortgage and Housing Corporation. It was 6.9% in 2020.

“After seeing residence tenants confined to their rooms during COVID, the potential clientele of independent seniors is more suspicious of RPAs,” admits Mr. Côté. They will delay their entry into RPA for a few years, according to him. But reality will catch up with them one day. “The real reason why we go to residence is the loss of autonomy,” he says.

According to Mr. Côté, RPAs are part of the solution in housing elderly people with a loss of autonomy because of the obvious economies of scale in the provision of care, especially in a context of labor shortages. work. “Where are we going to find all these people who will provide home care? he asks himself.