Assisted living fundamentals stable in 2Q11

Amid lackluster second quarter economic data and increasing uncertainty about future economic growth, assisted living fundamentals remained relatively stable. In 2Q11, assisted living occupancy increased 10 basis points to 88.5 percent. Absorption continued at a similar pace as seen since 3Q10, with the number of occupied units increasing by 0.4 percent in 2Q11.

While demand has been increasing recently, inventory has grown at similar rates, which has resulted in occupancy remaining essentially flat. The pace of inventory growth was 0.3 percent in 2Q11, but this pace may increase during the next four quarters as scheduled completions through 2Q12 would represent a 1.9 percent increase in existing inventory.

The uncertain outlook as a result of the growing volatility in the economy and financial markets may have a negative impact on absorption in the coming quarters, as potential residents may be hesitant to make relocation decisions during this current softness in the economy. The combination of a higher pace of inventory growth and a slower pace of absorption would likely to put downward pressure on assisted living occupancy in the near-term.

Graph courtesy of NIC MAP Data & Analysis Service.

Topics: Articles