For the first time during the recovery, seniors housing experienced a sizeable rate of inventory growth, which surpassed absorption and caused occupancy to slip 20 basis points during the quarter. During the second quarter, inventory grew at a 2.7% annual rate, its fastest rate of growth since the second quarter of 2009 when inventory grew at a 3.9% annual rate. In the previous 22 quarters, spanning back to the fourth quarter of 2009, inventory growth never exceeded a 2.0% annual rate. After recording its weakest reading since the height of the recession during the first quarter of 2015, absorption rebounded to a rate more reminiscent of what we’ve observed over the past few years. During the second quarter of 2015, absorption came in at an annual rate of 1.9%, up significantly from 0.2% during the first quarter. While it represented acceleration from the first quarter, it still was on the weaker side of where absorption rates have trended since mid-2013.
As we embark on the 25th National Conference, we realize how much the seniors housing and care sector has changed in terms of capital flow, market trends, operator sophistication to product evolution and investor interest. The industry is changing at an expeditious rate, so imagine what is to come in the next 25 including 2026 when the first Boomers turn 80 and beyond.