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 Seniors Housing Occupancy Rates Hold Steady at 88.1 percent in 1Q 2019: NIC

New data show a “steady as she goes” occupancy trend for seniors housing in the first quarter of 2019, with the rate virtually unchanged from the previous quarter at 88.1 percent, according to the National Investment Center for Seniors Housing & Care (NIC). Skilled nursing occupancy did increase slightly from the fourth quarter of 2018, while assisted living occupancy also gained slightly from its all-time low.

Overall, national seniors housing occupancy increased 0.1 percentage point from the third quarter of 2019 and decreased 0.2 percentage point from the first quarter (year-on-year comparison) of 2018, NIC said. Seniors housing occupancy for the first quarter of 2019 was 2.1 percentage points below its most recent high of 90.2 percent in the fourth quarter of 2014.

Despite the stable trend for the overall national occupancy picture, Chuck Harry, NIC’s head of research and analytics, said occupancy rates differed greatly from market to market, mainly because “local markets can vary due to changes in local economic performance, barriers to entry such as zoning and regulations, shifting demographics, and other factors.”

Of the 31 metropolitan markets that comprise NIC’s Primary Markets, the highest first quarter U.S. occupancy rates were in San Jose, Calif., (94.1 percent) and in San Diego (92.2 percent). On the other end of the scale, Houston (77.1 percent) and San Antonio (77.4 percent) had the lowest occupancy rates.

NIC data showed the largest occupancy increase from 2018 took place in Las Vegas, moving from 86.0 percent in the first quarter of 2018 to 87.9 percent during the same period in 2019. The largest decrease occurred in Houston, which declined from 78.9 percent in the first quarter of 2018 to 77.1 percent during the same period of 2019.

On other issues, NIC said its data point to a possible slowdown in new seniors housing construction. Seniors housing construction start-ups during the first quarter of 2019 in NIC’s 31 Primary Markets tallied 4,003 units, which include 2,236 independent living units and 1,767 assisted living units. Construction starts totaled 19,367 units across the previous four quarters. Data on quarterly construction starts are considered preliminary, as they often are revised in subsequent quarters as additional information becomes available, NIC said.

“We continue to see strong demand for seniors housing nationally, as demand slightly exceeded inventory growth in the first quarter, albeit by a relatively small amount,” said Beth Burnham Mace, NIC’s chief economist. “At the same time, inventory growth appears to be cooling, due to a slowdown in construction starts, raising the possibility that demand for seniors housing might better align with supply later this year.”

In breaking down the market segments for seniors housing, NIC said occupancy rates for independent living and assisted living properties averaged 90.4 percent and 85.5 percent, respectively, during the first quarter of 2019. This put independent living occupancy up 0.1 percentage point from the prior quarter and unchanged from the first quarter of 2018.

Assisted living occupancy remains relatively low and was up only 30 basis points from the all-time low of 85.2 percent reached in the second quarter of 2018, NIC said.  It was also up 0.1 percentage point from the fourth quarter but declined 0.2 percentage point from a year ago. 

Skilled nursing occupancy rates increased to 86.7 percent in the first quarter of 2019 from 86.3 percent in the fourth quarter of 2018. The nursing care annual inventory growth rate was -0.3 percent in the first quarter of 2019, while annual absorption was -0.2 percent. NIC said private-pay rents for the sector grew 2.6 percent year over year this quarter, up 0.1 percentage point from year-earlier levels.

During the first quarter of 2019, average rates of seniors housing’s annual asking rent growth was 3.0 percent, steady from the prior quarter, but down from a recent top of 3.8 percent in fourth-quarter 2016.

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