Independent Living Market Mostly Unaffected by Housing Crisis

By Anuradha Kher, Online News EditorAnnapolis, Md.–The overall market conditions for independent living facilities in the top 100 markets are sound, with demand and supply in check and rents growing above the rate of inflation, according to a survey conducted by the Annapolis, Md.-based National Investment Center (NIC) MAP, a data and analysis service for the seniors housing industry that tracked the top 100 markets in its Metro Markets Survey.There is, however, some worry that due to the housing crises, these fundamentals will undergo change and there will be a shift in occupancy rates. “This is because generally when someone moves into an independent living facility, they are doing so by selling their homes,” Michael Hargrave, vice president of NIC MAP, tells MHN.Occupancy in the fourth quarter of 2007 dropped to 92.3 percent from 92.5 percent in the second and third quarters of 2007. There was some softening of fundamentals, with demand being flat on an average. But overall the seniors housing market is looking positive, and is not significantly impacted by the mortgage crises, says Hargrave. “It is a ‘no news is good news’ kind of situation,” he adds.While rents have been growing above the rate of inflation in seniors housing, the fourth quarter of 2007 saw some slowdown. During this quarter, the average monthly revenue per occupied unit was $ 2,390 per month, which represented a 2.2 percent year-on-year increase.From the point of view of construction, things are looking positive, says the study. The number of independent living units under construction in the top 100 markets for the fourth quarter 2007 was 14,722 which represents an overall shortage of 3.9 percent of existing inventory in the markets that have independent living. “The pipeline is not opening up fast enough and there is not enough stock in some of these markets. This is a good opportunity for developers and investors,” says Hargrave.On the other hand, in markets such as Denver and Seattle, there is an excess of inventory and “the concern is whether these markets will be able to absorb the growth,” says Hargrave.There is currently an oversupply of 21.6 percent in Denver and a 19.9 percent excess of inventory in Seattle. But in Atlanta, where the inventory expanded by 17 percent in the fourth quarter of 2007, demand also grew by 13 percent. “So if Atlanta is any indication to go by, these cities should do fine,” says Hargrave.