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 Occupancy Rates for Seniors Housing Retreat in Second Quarter: NIC

Seniors housing inventories outpaced the number of people living in assisted living, skilled nursing, and other types of homes in the second quarter of 2017, according to a July 12 report by the National Investment Center for Seniors Housing & Care (NIC).

NIC said the occupancy rate for seniors housing properties in the second quarter averaged 88.8 percent, which is a decrease of 0.5 percentage point from the prior quarter and 0.9 percentage point below year-earlier levels.

“As of the second quarter of 2017, occupancy was 1.9 percentage points above its cyclical low of 86.9 percent during the first quarter of 2010 and 1.4 percentage point below its most recent high of 90.2 percent in the fourth quarter of 2014,” the report said.
In breaking down the data further, NIC said the occupancy rates for independent living properties and assisted living properties averaged 90.6 percent and 86.5 percent, respectively, for the second quarter of 2017. Both rates are below recent measurements, with the occupancy rate for independent living down 0.3 percentage point from the prior quarter and lower by 0.4 percentage point from year-ago.
The occupancy rate for assisted living retreated 0.7 percentage point from the first quarter of this year and 1.4 percentage points from year-earlier levels.
“Occupancy for assisted living was equal to its low point reached in the data series in second quarter 2009,” NIC said.
On the skilled nursing side, the report said the nursing care occupancy rate decreased to 86.5 percent in the second quarter, from 87.2 percent in the first quarter of 2017, while the nursing care annual inventory growth rate was 0.1 percent in the second quarter of 2017, and annual absorption fell by 0.6 percent.
Seniors housing annual absorption was 3.0 percent as of the first quarter of 2017, up 0.2 percentage point from the first quarter of 2017, and 0.6 percentage point higher from one year earlier. NIC said this marked the fastest growth in this rate since the organization began reporting the data in 2006. The seniors housing annual inventory growth rate in the second quarter of 2017 was 3.9 percent, up 0.5 percentage point from the prior quarter and also gaining at its fastest clip since NIC began reporting the data 11 years ago.
Current construction as a share of existing inventory for seniors housing preliminary slowed 0.3 percentage point from the prior quarter, to 5.8 percent, and was 0.8 percentage point below its recent high of 6.6 percent in third-quarter 2016.
Seniors housing construction starts within the 31 Primary Markets during the second quarter of 2017 preliminarily totaled 4,172 units. This number includes 1,897 independent living units and 2,275 assisted living units. On a preliminary four-quarter basis, starts tallied 18,324 units. NIC noted that construction starts data are often revised retrospectively in subsequent quarters as additional information is made available.
Commenting on the trends, Chuck Harry, NIC’s chief of research and analytics, said, “The softening occupancies for both assisted living and independent living are the result of their inventory growth, or unit completions, surpassing their relatively healthy annual rates of absorption of units, including the record pace of absorption for assisted living.”
He added that the record rate of annual absorption for assisted living properties of 4.3 percent remained well short of its record annual inventory growth of 5.9 percent. For independent living properties, those annual rates, respectively, were 2.0 percent and 2.5 percent.
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