Dive Brief:
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A “building spree” of assisted living facilities is oversupplying the demand from the seniors they are designed to house, The Wall Street Journal reported on Tuesday.
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The stock prices of several large companies that specialize in senior housing have taken a hit amid concerns of potential overbuilding, according to The Journal, which pointed to falling shares of Health Care REIT Inc, HCP Inc., and Brookdale Senior Living.
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Occupancy fell in all types of senior housing in both the first and second quarters of the year, according to the National Investment Center for Seniors Housing & Care, an Annapolis, MD-based nonprofit. The occupancy rate for assisted-living units, for example, was 88.4% during the second quarter of this year — 0.2% lower than during the first quarter and 0.3% below the second quarter of 2014.
Dive Insight:
“Everybody’s thinking about these 10,000 baby boomers turning 65 every day,” Aubra Franklin, chief executive of Franklin Companies, which builds senior-living facilities, told The Journal, noting that many seniors continue to live independently and will for many years.
In Dallas, Atlanta and Chicago, construction of assisted-living units accounted for more than 10% of those cities’ housing inventory, according to The Journal. A more typical market share is 6.4%. In smaller cities, the share of senior facilities claims an even greater share of housing inventory.
Still, National Investment Center Chief Economist Beth Burnham Mace told The Journal occupancy rates will rise “in the near future” as more seniors need the help with daily living provided by assisted living facilities.
Meanwhile, homebuilders’ confidence in the market for newly built, single-family homes designed for buyers age 55 and older waned slightly in the second quarter. A National Association of Home Builders survey indicated that while more builders than not are optimistic about the near future of that sector, they downgraded their view of current and expected single-family home sales over the next few months.