Recent third quarter data was not promising, but are we looking at the wrong numbers?
When NIC released its occupancy stats last week, people were hoping for good news. Hope, however, is not a business plan. The third quarter has historically been a “make-up” quarter, making up for the usual dismal first quarter and the now not-so-good second quarter. It didn’t happen this year, and as we head into the flu season, that is very troubling.
What may be more troubling is that in the top 31 MSAs, assisted living unit growth is still at its highest levels since before 2006. And while moderating, assisted living construction as a percent of inventory is still higher than it has been in 13 years. Freestanding memory care construction as a percent of inventory, however, has plunged by more than 50% in recent years, which will help stabilize that market.
What all this means is that we still have a long way to go to get beyond this slump. But it is not all bad, as my friend Steve Moran recently pointed out in his blog. If NIC used median numbers, as opposed to the average, everything looks better, and assisted living occupancy would be 570 basis points higher. Perhaps that is what buyers and investors are looking at. Think about it.