Senior housing occupancy has been edging upward in recent quarters pressured by demand outpacing supply, and the industry is poised for more gains as the overall housing market experiences a similar trend.

“In recent years, the housing market acted as a headwind for seniors housing market fundamentals, as many seniors rely on the sale of their homes prior to moving into a seniors housing community,” said the research department of the National Investment Center (NIC) for the Seniors Housing & Care Industry. “As the housing market improves, it will become less of a headwind for improving seniors housing market fundamentals.”

Home prices rose across all 20 cities tracked by S&P/Case Shiller Home Prices Indices in March, especially in markets such as Atlanta, Los Angeles, Phoenix, and San Francisco, where prices jumped more than 15% in the past year.

“While the magnitude of these increases may be reminiscent of those during the housing bubble, the circumstances are different this time around,” says NIC. “The recent rise in prices has been largely supply-related, as tight inventories have caused fierce bidding competitions in some markets.”

Housing inventory has risen slightly to 4.7 months worth of supply as of March, compared to 4.3 months in January, according to the National Association of Realtors. Overall, though, inventory has seen a decline since mid-2010.

“As home prices recover and with fewer homeowners underwater, more homes are likely to go on the market,” NIC predicts. “Since months of supply and home prices are inversely related, as more homes come on the market, it’s likely that the pace of home price appreciation will begin to slow.”

Even if home price appreciation does slow, economists still are bullish on the market. Home prices will rise 5.4% in 2013, according to economists in the second quarter Zillow Home Price Expectations Survey.

From: Senior Housing News