Second quarter occupancy trends are soft again, with construction starts strong.
So, are people finally beginning to believe that the development boom we have been talking about is actually starting to impact census? We are talking about assisted living and memory care, because that is where the action has been. According to the second quarter NIC MAP data, assisted living occupancy has dropped again sequentially, and is down 45 basis points from a year ago. But worse, and more to the point, trailing 12-months assisted living construction starts as a percent of existing supply has been at 4.7% and 4.8% for the past two quarters, much higher than a year ago. And, more development pipelines between 30 and 100 properties each over the next five years keep on being announced. While we know that not all of these properties will be built, a lot of them will, and not all of the new construction is coming from these major announcements. According to the NIC data, we are approaching the development highs of the 2006 to 2007 period, but our guess is that this time next year we will surpass it. If you are still not worried, you must be sailing down the river called Denial.
The bottom dropped out of fertility levels during the 1929 to late ’30s Great Depression. Those born during that period are our 85-90 year olds of today – typical of those who move into A.L. and Memory Care. There won’t be as many of them as we might expect.
James, actually, those born between 1929 and the late 1930s are today’s 76 to 86 year olds, so this age demographic will not be the huge boon for seniors housing that some expect. So I fully agree with you, but this group is even younger.