Dave:
Yeah, that makes sense.
Lu:
So given the intimidation of spreading the disease and given the various issues with facility shutting down with inadequate supply of labor and material, it really has been hit the hardest. So that has been discouraging a lot of the senior living construction ever since because just to plan and build and delivering the facility into the marketplace does take much longer time to prepare. So that is really behind the supply side of the equation. So we didn’t really see a lot of the supply increases as we saw at other part of the housing sector we call senior housing as a niche sector because it’s traditionally only a small pie of the total universe, but we didn’t really see that pie growing as proportionally as rest of the housing sector. But demand, if you look at over the next 10 years, I really think that’s a huge investment opportunity because a lot of the federal funding will continue to be, I mean, preserved for the senior housing community.
But on the other hand that really points me to talk about the overall, the broader structural shifts. So for anybody who’s on the show who has been monitoring the construction spending, which is the new data just released a couple of days ago, the construction spending at the national level has been on the downward trend since the beginning of the year. So it really doesn’t matter if you look at a single family construction versus multifamily construction, it has been coming down from its peak and it really just depict that sentiment across builders which have to confront the uncertainty from the tariff, from the treat negotiation, immigration policy on top of everything else going on in the economy. It’s really just not showing a lot of sentiment and not to mention the current dynamics in terms of the spring home buying season and lead season and really didn’t see a lot of the price gain as many would expect.
So that really hampered on the overall investment sentiment, but what we are looking is not so that we are going to have no jobs from the development point of view over the next few years. So what we are betting on is that subtle but steady structural changes in terms of what kind of the housing product will be in favor on both supply side and demand. So given the affordable housing, student housing and senior housing, so looking at some of the niche area. So we are actually seeing a lot of the sectors which hasn’t been enjoying the supply gain will finally have their opportunities. So it does require understanding different levels of policies and preparing for the different capital stack, which is much more complex than building a single family and multifamily, but just gave them where that inventory will be shifted over the next few years. So this is what I’m betting and I did bounce off my ideas with other housing economists on the team, but we do think there is that niche area which we can possibly start shifting of at least considering shifting which points to this overall structural shift.
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