Michael Hargrave, Vice President, National Investment Center (NIC) for the Seniors Housing and Care Industry and Chuck Harry, Director of Research and Analysis, NIC presented a Housing Market Fundamentals session at the Assisted Living Federation of America (ALFA) conference in Dallas.
I walked away with these key points.
Inventory Still Exceeds Absorption
Building Needs to Slow so Occupancy Can Catch Up
Secondary Markets Are Worth Exploring
The news is generally positive but there is a long way to go to recover.
Assisted Living is filling 2.2 units per month versus 3.4 units per month in 2008. Memory Care is stable but has a low rate of move in, less than 2 per month. There is free standing, excess occupancy in this area most likely from over building and the market needs to catch up. Nursing home occupancy took a precipitous drop and all living sectors were averaging 88 percent occupancy. Free standing independent living seemed to be the bright spot and I would contend it supports people's desire to age in THEIR place, something that was a big topic of discussion throughout the conference.
Rents across the board were down with Assisted Living well down - a 0.4% growth in rents from a high of 4% at one point.
Secondary market occupancy is growing faster. It could be the housing recovery and people's ability to sell and therefore move. Rents are growing faster there as well.
This points to competition and the need for providers to have compelling value propositions for consumers considering assisted living. The ball would appear to be in their court.
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