There are many commonly held misperceptions about seniors housing. In light of the real estate industry's growing interest in this business, debunking these myths is imperative to the future success of seniors housing properties.

1 The Age Wave has arrived. Despite the success of Ken Dychtwald's popular 1989 book Age Wave, the reality is that the true impact of the aging of America on seniors housing and long-term care is still at least 15 years away, when the 75 million Americans born between 1946 and 1964 (the "baby boomers") begin reaching age 65. Since the average seniors housing resident is typically 75 years or older, the effects of the pending "age wave" will not likely impact the seniors housing industry for at least another 25 years. That is not to say that the demographics are not favorable for seniors housing today and in the decade to come. They are, but an important and often overlooked fact is that between 1990 and 2010, the senior population will actually grow less than in any similar period since 1910. This slow growth is the result of extremely low birth rates in the era of the Great Depression.

2 Seniors housing is an unregulated business. One of the biggest myths regarding seniors housing is that it has somehow managed to remain an unregulated business. While it is true that the federal government does not currently have regulation specific to seniors housing, industry operators must nevertheless comply with a plethora of federal and state regulations. Virtually every state has its own distinct regulatory and licensure requirements for seniors housing, with more care-intensive seniors housing, such as assisted-living facilities, typically facing more stringent regulatory requirements than housing with minimal supportive care service capacity, such as seniors apartments.

At the federal level, seniors housing operators must comply with a number of requirements related to both employees (e.g. OSHA requirements) and residents (e.g. fair housing/Americans with Disabilities Act requirements). The hybrid nature of seniors housing, which often blends aspects of both housing and supportive care services, is a frequent cause of confusion as operators and trade groups such as the American Seniors Housing Association seek to ensure that seniors housing is not regulated as an institutional care setting. The industry is, in fact, required to meet a number of state and federal regulatory requirements and continues to battle uninformed legislators in states that wish to regulate seniors housing as institutional health care settings.

3 Public policy does not impact private-pay seniors housing. Although seniors housing is almost exclusively paid for out-of-pocket by older adults and, in some instances, by their adult children, it is nonetheless incorrect to assume that public policy does not impact this business. A cottage industry of eldercare attorneys and Medicaid estate planners, for example, continues to "assist" countless seniors and their families in efforts to transfer assets in order to qualify for Medicaid long-term care, which is provided almost exclusively in nursing homes. This persistent and widespread "gaming" of the Medicaid system precludes many seniors from choosing private-pay seniors housing since it is both easy and inexpensive to transfer one's assets in order tospend-down." While it is difficult to estimate the extent to which this practice occurs, it is interesting to note that although just 13% of the older adult population falls below the poverty line, almost 75% of all nursing home days are paid for by the U.S. taxpayer through Medicaid.

U.S. tax policy also negatively impacts private-pay seniors housing. For example, many elderly persons do not leave their single-family home to move into a continuing care retirement community (CCRC) because of current tax law, IRS Revenue Ruling 60-135, which states that a resident using proceeds from the sale of a prior principal residence to pay a CCRC entrance fee is not eligible to defer recognition of some or all of the gain under Section 1034 of the Internal Revenue Code. As a result, tax policy encourages an elderly person with significant home equity to reinvest in another principal residence with no supportive services, rather than in a CCRC where the assets can be used to help prevent the person from incurring catastrophic health care costs and becoming dependent upon government-funded health care programs.

4 Seniors housing is most successful in the Sun Belt. Although Sun Belt states, such as Florida and Arizona, have long been associated with seniors housing, it is a mistake to conclude that these are the "best" states for seniors housing. The fact is that seniors housing of all types has been successfully developed in states not traditionally known for retirement living. And while Florida and Arizona are, of course, very substantial seniors housing markets, so are other states such as New Jersey, Oregon, Nebraska, Wisconsin, Pennsylvania, Michigan, Massachusetts, Virginia, Idaho, Minnesota, Connecticut and Colorado.

5 seniors housing is a new and emerging business. Wall Street may have just "discovered" seniors housing, but seniors housing is by no means a new product. In fact, its roots can be traced back to the late-1890s, when a number of church and fraternal organizations began offering housing and care to elderly members who were without families or lacked significant resources to pay for needed care and shelter. And while not-for-profit organizations have the longest and most extensive involvement in seniors housing, a substantial number of proprietary firms have been actively involved in the industry since the late-1960s and early-1970s.

6 Specific seniors housing products serve a distinct resident population. Although seniors housing professionals often differentiate various types of elderly housing as though each serves distinct segments of the older adult population, the reality is that much of the professionally owned and managed seniors housing stock, even, congregate seniors housing, serves residents who, at various times, receive different degrees of supportive care services. With (1) passage of the Fair Housing Amendments Act of 1988 and Americans with Disabilities Act, of 1988 the emergence of a burgeoning home health care market, and (3) state regulations now encouraging "aging-in-place," many properties are true hybrids serving residents with a variety of care needs. Even in many congregate properties today, it is not uncommon to find residents 80 years and older.

7 Virtually everyone wants to remain in their own home for as long as possible. Until recently, research findings on this topic have been consistent - almost every older adult wants to remain in his or her home for as long as possible. A very recent (1996) survey by the Center for Mature Consumer Studies at Georgia State University, however, found that nearly 30% of respondents in a sample of nearly 1,500 persons aged 55 and older indicated that they plan to live in a retirement community. This is a substantially higher percentage than identified in previous studies and, in my opinion, still provides a distorted perspective due to the very broad age range of persons sampled. A better view of seniors would likely come from a sample of seniors aged 70 or 75 and older, rather than age 55 and older, because few people consider service-enriched seniors housing for themselves prior to age 75.

8 There are 40,000 assisted-living facilities in the United States. Few seniors housing statistics are as obviously incorrect as the commonly quoted figure putting the number of U.S. assisted-living facilities at 40,000. And while there is no definitive source that can be used to refute this estimate, all evidence would suggest that there are not even 40,000 professionally owned and managed seniors housing residences in the United States. A more realistic estimate, based on CD-ROM searches of "Yellow Pages" listings and other sources of information gathered by the American Seniors Housing Association, is that there are somewhere between 15,000 and 20,000 professionally owned and managed seniors housing properties in the United States, including market-rate congregate, assisted living and continuing care retirement communities, of which perhaps 5,000 to 7,500 could be called assisted living.

9 The U.S. population understands its long-term care options. Despite increased media coverage of various long-term care options, including seniors housing, large segments of the population are not aware of alternatives to nursing homes. Recent research by the Harvard School of Public Health and Louis Harris is and Associates, for example, found that over 60% of the population aged 50 years and older had not heard of a continuing care retirement community, while about half were unfamiliar with assisted living. Furthermore, research conducted by the American Seniors Housing Association and Coopers & Lybrand LLP found that industry executives do not believe that the majority of hospital discharge planners and social services and aging referral agencies are sufficiently familiar with seniors housing options.

10 The industry has reduced resident turnover. Although the industry is very cognizant of "aging-in-place," data suggests that in certain types of seniors housing, such as assisted-living facilities, resident turnover may be increasing rather than decreasing. Between 1993 and 1994, for example, median resident turnover in assisted-living facilities increased from 44% to 55%. And while this data comes from limited samples of such facilities, many industry observers believe turnover is likely to increase as assisted living begins to emphasize short-duration care/rehabilitation under managed-care arrangements.

David S. Schless is executive director of the Washington, D.C.-based American Seniors Housing Association and vice president of National Multi Housing Council/National Apartment Association Joint Legislative Staff with principal responsibility for issues related to senior housing.