4Q2018 Seniors Housing Actual Rates Key Takeaways
The NIC MAP® Data Service recently released national monthly data through December 2018 for actual rates and leasing velocity. The NIC Actual Rates initiative is driven by the need to continually increase transparency in the seniors housing sector and achieve greater parity to data that is available in other real estate asset classes. Having access to accurate data on the monthly rates a seniors housing resident pays as compared to asking rates helps us achieve this goal.
Key takeaways from the 4Q2018 Seniors Housing Actual Rates Report include:
- Average initial rates for residents moving in were below average asking rates for both majority independent living and majority assisted living properties, with monthly spreads larger for majority assisted living properties throughout the entire reported period dating back to April 2015.
- As of December 2018, initial rates for majority assisted living properties averaged 8.8% below their average asking rate, which equates to an average initial rate discount of 1.1 months on an annualized basis, up from 1.0 months in December 2017, but down from 1.2 months in December 2016. The average discount for majority independent living properties was smaller at the equivalent of 0.7 months and was down from 0.8 months in December 2017, but up from 0.4 months in December 2016.
- Average asking rates for majority independent living properties have exceeded in-place rates for the past 8 months, a change from the prior 14 months (March 2017– April 2018) when asking rates were less than in-place rates. For majority assisted living properties, average asking rates have consistently exceeded average in-place rates.
- The average majority independent living initial rate in December 2018 was 6.7% above its year-earlier level, registering the strongest pace in the 33 months that NIC has reported annual growth rates and significantly more than the average in-place rate growth of 2.2%. Annual growth for independent living move-in rates has been positive for the past eight consecutive months, a sharp contrast with the prior 16 months when year-over-year growth had been generally negative (January 2017 through April 2018). This pattern is not evident, however, in assisted living properties.
- Annual growth in the average in-place rate for majority independent living properties has averaged 2.1% for the past five months, an acceleration from earlier in the year when growth averaged 1.3%. For majority assisted living properties, the annual growth in the average in-place rate has hovered around 1.9% since April 2018, up from 0.5% in the first three months of the year.
- The rate of move-ins has exceeded or equaled the rate of move-outs since April for majority independent living, a contrast to the first three months of the year when move-outs exceeded move-ins. This pattern may reflect the influence of the cold winter months and the flu season. This same pattern is evident in the 2017 data, with move-outs exceeding move-ins only during the winter months.
- Assisted living also saw move-outs exceed move-ins during the winter months, but the trend in the rest of the year is more sporadic, with move-outs having exceeded move-ins in September and December as well. 2017 data also show stronger move-out patterns in the January to April period.
This Seniors Housing Actual Rates Report provides aggregate national data from approximately 300,000 units within more than 2,500 properties across the U.S. operated by 25 to 30 seniors housing providers. Note that this monthly time series is comprised of end-of-month data for each respective month. The operators included in the current sample tend to be larger, professionally managed, and investment-grade operators as we currently require participating operators to manage 5 or more properties.
While these trends are certainly interesting aggregated across the states, actual rate data will be even more useful when it is available at the CBSA level. As NIC continues to work towards growing the sample size to be large enough to release data at the CBSA level, working with leading software providers like MatrixCare, Yardi, and Eldermark makes it easier for operators to contribute data to the Actual Rates initiative. NIC appreciates our relationships with software providers and our data contributors and their work in achieving standardized data reporting. Operators contributing data receive the national report free of charge and will soon receive complimentary reports benchmarking their data against the national figures. They are also helping to increase transparency for the benefit of the sector.
If you are an operator or a software provider interested in how you can contribute to the Actual Rates initiative, please contact Brian Connolly at firstname.lastname@example.org.