Senior housing occupancy is at its highest level, on average, since early 2008, according to the latest data compiled by the National Investment Center for the Seniors Housing & Care Industry (NIC). At an average 90.1% across all senior housing types in the first quarter of 2014 some of the top-31, or primary, markets have now surpassed their pre-recession peaks.
Increasing occupancy rates, expanding demographics and and other indicators reveal a formidable future for the senior housing industry, NIC experts said during a webinar hosted National Real Estate Investor.
“There’s less difference between the primary and secondary markets’ [occupancy] — the gap has narrowed to 180 basis points,” said Beth Burnham Mace, chief economist and director of capital markets for NIC, adding that overall there has been more improvement in primary markets versus secondary markets in the past few years.
A majority of the 100 markets tracked by NIC are performing at occupancy levels above 90%, data show. Occupancy for all campus types, except assisted living, increased in the first quarter of 2014.
Mace said that historically occupancy among assisted living properties fall in the first quarter of the year, likely because of the prevalence of the flu during that time. Even when seasonally adjusting assisted living data however, the market also shows slight growth.
Among regional outliers San Jose, Calif. had the highest occupancy in the first quarter with 95.1%, which also surpasses all previous performance levels for the region. Phoenix had the lowest occupancy overall with 80.6%.
San Francisco, Cleveland, Detroit, Las Vegas and Orlando also reached all-time peak highs for occupancy—going beyond where they were before the recession took hold.
The economy’s impact on job growth and income, consumer attitudes, the housing market and the Federal Reserve are indicators to watch when evaluating senior housing, Mace said, adding that San Jose has one of the strongest job markets in the industry.
Interest rates are also coming into play in the near term, she said.
“Short-term interest rates remain close to 0, and should remain so for some time,” Mace said.
“People have more equity in their home, and are more likely to sell their home and move into senior housing,” she said.
Occupancy rates on average are poised to increase over the next four quarters, NIC expects, but analysts are watching supply carefully relative to existing demand.
“Supply will be more of an issue in assisted living,” said Chris McGraw, senior research analyst with NIC.
Written by Cassandra Dowell