Senior housing occupancy will increase approximately 60 basis points in 2013 to reach an average 89.7%, up from current levels hovering around 89%, according to data from the National Investment Center (NIC) for the Seniors Housing & Care industry.
Occupancy rates across the senior living sectors concluded a third straight year of recovery in 2012, with assisted living slightly edging out independent living and continuing care retirement communities (CCRCs).
As of the end of 2012, assisted living boasted the highest occupancy rates at 89.1%. Independent living occupancy was just 10 basis points behind, and continuing care retirement community (CCRC) occupancy was slightly lower at 88.9%.
Nursing care occupancy rates have remained mostly flat at 88.1%. Memory care has actually seen a “negligible” decline in occupancy, says NIC’s director of research and analysis, Chuck Harry.
The interesting aspect, he says, is the clustering of assisted living, independent living, and CCRC occupancy rates because they’re “all right on top of each other.”
CCRCs have historically maintained occupancies above those of assisted and independent living, Harry says. “The fact that they’re all clustered together now is unique, at least during this time period,” he says.
While CCRC occupancy is very close to those of assisted and independent living, its recovery is lagging somewhat, with rates trending flat for both entrance fee and rental models.
Even though assisted living currently has the highest occupancy rate, its recovery has not been as strong as that of independent living. Assisted living occupancy bottomed out earlier than independent living, Harry pointed out, and it also started its recovery earlier.
While occupancy in assisted living began ticking back up in the second quarter of 2009, independent living rates didn’t start improving until the third quarter of 2010.
Once freestanding independent living occupancy began to recover, it has done so at a slightly faster rate compared to other asset classes, although it’s still trending slightly below assisted living occupancy, Harry says.
Looking ahead, there’s another factor that can influence recovery rates for assisted living occupancy beyond its ties to the housing market, Harry says.
“Majority assisted living is also tied to the employment market,” he says. “If folks are unemployed or underemployed, they may serve as an alternative caretaker of their parent.”
With higher unemployment or underemployment rates, adult children may have more time and ability to take care of their parents rather than help move them into a senior living community. Money can also be an issue.
“The costs associated with assisted living are often subsidized by adult children,” Harry says. “Even though seniors generally aren’t part of the labor pool, the impact on the economic status of the adult children demographic can impact occupancy.”
Written by Alyssa Gerace