The unemployment rate remained low at 3.7% in November, which is the lowest rate since December 1969. The jobless rate remains well below the rate of what is generally believed to be the “natural rate of unemployment” of 4.5%, which suggests that upward pressure on wage rates will continue. Further indications that this is in fact starting to occur were released in the report. Average hourly earnings for all employees on private nonfarm payrolls rose in November by six cents to $27.35. Over the past 12 months, average hourly earnings have increased by 81 cents, or 3.1%. This was the same as last month and the strongest pace since 2009. Last year, they rose by 2.6%.

A broader measure of unemployment, which includes those who are working part time but would prefer full-time jobs and those that they have given up searching—the U-6 unemployment rate—rose by 0.2 percentage points to 7.6% in November, but it was still below its rate of 8.0% one year ago.

The Labor Department also reported that there were 155,000 jobs created in the U.S. economy in November, below the consensus expectation of 198,000. This was the 98th consecutive month of job growth. However, October was revised down from 250,000 to 237,000 and September was revised up to 119,000 from 118,000. With these revisions, employment gains in September and October combined were 12,000 less than previously reported. The September figure may have been negatively affected by Hurricane Florence, while the November figure may have been affected by snowstorms in the Midwest and wildfires in California.

Payrolls have averaged 170,000 per month for the last three months and 206,000 for the past eleven months, up from 182,000 last year. It is important to note that the jobless rate is calculated from a different survey than the survey used to calculate the number of new jobs (the household versus the establishment survey, respectively).

In November, employment in health care rose by 32,000. In the past year, health care has added 328,000 jobs.

The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work was unchanged at 62.9% in November, still very low and near its cyclical low of 62.3% in 2015. The low rate at least partially reflecting the effects of an aging population.

Despite the weaker-than-expected gain in jobs, the recent acceleration in the wage data will provide further support for the Federal Reserve to increase the fed funds rate by 25 basis points at its December 18th and 19th FOMC meeting. Already this year, the Fed has increased the fed funds rate by 25 basis points three times and most recently in September it increased the fed funds rate to a range between 2.00% and 2.25%. The Fed has raised rates by a quarter percentage point eight times since late 2015, after keeping them near zero for seven years.

For consumers who save, higher rates are good news as their returns on CDs and money market accounts will grow at a faster pace. But for borrowers—both consumers and businesses–higher rates are not good news as their borrowing costs will be higher.

Penetration rates vary across markets and across time.  Some of the variation may be due to differing demand factors such as population and household growth and size, consumer preferences, familiarity and comfort with the product, changes in the composition of inventory, and cultural influences. This blog post explores some of this variation.

The chart above shows the ordinal ranking of occupancy rates and penetration rates for the Primary 31 markets for Majority Independent Living (IL) properties as of 2Q2018 from the NIC MAP® client portal. Although one might expect areas with high occupancy to also have high penetration, the data show that is not always the case and that there is variation in the relationship between occupancy rates and penetration rates.

Penetration rates over time: Some have risen, some have fallen.  An analysis of metropolitan market penetration rates across time that uses NIC MAP seniors housing inventory and occupancy data and time series household demographic data from the U.S. Census and Moody’s Analytics reveals interesting results¹ This analysis calculates two types of penetration time series: occupied penetration (calculated as the number of occupied units divided by households age 75+) and supply penetration (open inventory divided by households age 75+). After calculating the supply penetration rate and occupied penetration rate time series for the Primary 31 Markets, we also calculated the respective changes from 4Q2006 to 4Q2016 for each metropolitan market.

The data show wide differences in penetration rates by geography, with high penetration rates for Majority IL, Portland, Oregon; Philadelphia; Kansas City; and Seattle ranked high, while Los Angeles; Riverside; New York; and Las Vegas ranked low.

The analysis also examined changes in occupied penetration rates across time by metropolitan market. For Majority IL, 17 out of the 31 Primary Markets saw decreases in occupied penetration rates in the 10 years ending in 2016, while the other 14 showed increases. For the aggregate Primary 31 Markets, occupied penetration remained flat at 5.6% for Majority IL.

Why have some markets experienced rising penetration rates, while others have not?  The answer reflects underlying supply and demand factors, such as a comparison of growth in inventory compared with growth in households over age 75, demand-related factors such as familiarity with the product, demographic patterns of both seniors and their adult children, and in some cases idiosyncratic factors unique to each metropolitan area such as cultural comfort with the product offerings.  Operator reputation in a market may also help explain penetration rates.  This variability reinforces how important it is to evaluate conditions at a local market level.

Conclusion.  Penetration rates and occupancy rates do not have a clear-cut relationship across markets.  Penetration rates can increase when inventory growth outpaces household growth. In some instances, this may result in falling occupancy rates; but in others, occupancy rates remain steady.  Factors such as familiarity with the product type, marketing and education efforts, operator reputation, growth in the number of seniors and their adult children, variation in population health needs, local cost of living, affordability of product, and perhaps climate, can also influence penetration rates. 

¹ The Moody’s Analytics time series data for Households over age 75 based on the U.S. Census at this time is currently only available through 2016.

Drawing over 1,500 owners, operators, capital providers, and other seniors housing & care stakeholders, the upcoming NIC Spring Conference has established itself as a must-attend event for decision makers across the sector. To miss it is to pass up a rare opportunity to build relationships, make new connections, and gain the latest data and thought leadership, in 3 value-packed days of meetings, presentations, breakout sessions and networking opportunities.

This year, the event, titled Investing in Seniors Housing & Healthcare Collaboration, reflects the reality that the sector faces a period of change and adaptation. That fact, for some in the industry, makes this year’s event all the more impactful, as it is designed to help decision makers explore new opportunities, develop new relationships, and break down old silos as they adapt to a value-based world.

With the close involvement of trail blazers from within the industry, and our own subject matter experts, NIC has designed a program to provide real value for every attendee. Stakeholders from across the sector, from owners to developers to capital providers and investors will find the latest, most relevant data, innovations that address the most pressing challenges, thought leadership from some of the most respected voices in the industry, and new opportunities to succeed in an era sure to demand change.

Perhaps the most unique aspect of the Spring Conference is that a growing number of senior decision makers from the healthcare sector will be there. While the majority of attendees will be real-estate based investors, capital providers, owners, operators, providers and other stakeholders from within the sector, NIC is encouraging health systems, physician-led organizations, managed care plans and payors, home health, home care and hospice companies to attend, together with their investors. These potential healthcare partners, who have an active interest in understanding the opportunities in senior care collaboration – but may never have done so before – will discover new relationships as they seek to address the needs of their patients beyond the healthcare facility.

As healthcare providers come under increasing pressure to improve patient outcomes while reducing costs, the seniors housing & care sector, which is home to millions of high-need, high-cost seniors every day, offers a compelling array of partnership opportunities, some of which are already being pursued by industry leaders in both sectors. This is the only industry event that offers the opportunity to explore collaborative relationships between seniors housing & care organizations and potential health care partners.

The NIC Spring Conference is an event designed to provide real business value to every attendee, while delivering a coherent and timely central thesis that will benefit the industry as a whole, ultimately serving NIC’s mission, which is to improve access and choice for America’s seniors. To learn more about the 2019 NIC Spring Conference, including networking opportunities and programming, sponsorship options, and special offers, such as the currently available early bird rates, click the link below – and see you in San Diego!

The 2019 NIC Spring Conference luncheon keynote talk will be delivered by bestselling author, consultant and futurist Ian Morrison. Morrison is an internationally known specialist in long-term forecasting and planning, with an emphasis on the changing business environment in healthcare. Known for his many books and articles on the changing healthcare system – and notorious for his Scottish wit – Morrison is ideally qualified to bring into focus the coming challenges and opportunities facing the seniors housing and care sector. 

With a luncheon audience expected to exceed 1,200 leaders in the space, including a small but growing number of executives from the healthcare sector, Morrison will have the ear of many of America’s seniors housing and care decision makers.  

While most conference attendees are executives in real-estate based businesses, healthcare partnerships are expected to be an essential component to success in coming years. Healthcare stakeholders, who have an active interest in understanding the opportunities in senior care collaboration – but may never have done so before – are investigating potential partnerships as they seek to address the needs of their patients in a value-based world. 

As the healthcare system adjusts to a value-based model, and as fundamental shifts in demographics, consumer demands, payment systems and business models form a new paradigm of healthcare delivery and payment, the seniors housing & care sector will need to adapt. Collaboration with new healthcare partners will not be an option, but a requirement, in a system increasingly focused on achieving better outcomes at lower costs.  

Be prepared for an engaging and convincing account of what lies just ahead for the sector, and even for a touch of wry humor, as Morrison applies his unique experience and perspective to the task of inspiring us to think differently about the role of our sector within a larger system in flux. 

As NIC MAP^® Data Service clients know, NIC regularly adds new features to the client platform, often as a direct response to client requests, or as new data and analytical tools become available. NIC works hard to ensure developers, operators, investors, and other stakeholders, have access to the high-quality data they need from the best available time series market data to the latest market preference indicators.

In the latest upgrade, NIC added Walk Score to NIC MAP, providing a measure of “walkability” for individual properties in the national database. The scores, which range from zero to 100—with higher scores indicating greater walkability—can help users easily compare walkability at different seniors housing properties. The new data can easily be incorporated into analyses, as NIC clients assess the impact of this emerging trend on marketability and financial performance.

Recent research and consumer trends are indicating that the seniors housing of the future will not necessarily be located primarily in suburban and rural areas.  Several studies underscore the emerging consumer desire for walkable living, including a 2017 Welltower survey, which found that 7 out of 10 urbanites still want to live in their city after the age of 80. For Baby Boomers, the share was higher, at 8 out of 10.  And, according to a recent survey conducted by A Place for Mom, between 80 and 90 percent of consumers in independent living properties and senior apartments, and 66 percent of residents in assisted living, prefer walkable neighborhoods.

The integration of Walk Score into NIC MAP provides walkability measures at the property-level to facilitate development and investment decisions that reflect the lifestyle and location preferences of many seniors and their family members.  With a segment of the present and future seniors housing residents preferring walkable neighborhoods, integrating Walk Scores into NIC MAP can help inform development locations and ensure seniors have choice in locations, including those that are highly walkable.

NIC MAP clients can log in and view a video tutorial for more information. To learn more about NIC MAP, and get the latest on what the platform has to offer, prospective clients are encouraged to reach out to Sales at sales@nic.org.