Student, Senior Housing Hit Hardest in Q2: Moody’s

The two sectors saw rising vacancies and falling rents owing to the pandemic, and affordable housing was largely unaffected.

Student housing and senior housing witnessed substantial increases in pandemic-related second-quarter vacancy rates, while affordable housing remained comparatively unaffected by COVID-19 in the spring quarter, according to Moody’s Analytics’ Q2 2020 Quarterly View report.


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The student housing sector has been hit hard due to many universities and colleges moving to virtual classes. For institutions holding in-person classes, the impact of potential campus outbreaks leaves the financial health of student housing in doubt.

Student Vacancy and Growth. Source Moody's Analytics REIS
Student Vacancy and Growth. Source Moody’s Analytics REIS

On a national basis, the sector is likely to see vacancies rise between 80 and 210 basis points, and rents decline by 4.5 percent to 5.6 percent. “Rising vacancy and falling rents are nearly ubiquitous cross-sector,” Moody’s Analytics’ Q2 2020: Student Housing Quarterly View report stated.


READ ALSO: Senior Housing Occupancy Slips to All-Time Low


Senior Housing Aggregate Vacancy Rate. Source Moody’s Analytics REIS

Steadily rising vacancy rates have been witnessed for at least two years across the senior housing sector. But the “stark jump” from an increase of 10 basis points in the first quarter to 220 basis points in the second quarter is traceable to COVID-19 and seniors’ vulnerability to the virus.

That leap brought the national vacancy rate for senior housing properties to 12.3 percent by the end of the second quarter. The pandemic had moderately varying effects, depending on subtype. The most significant spike in vacancy came in memory care, which jumped 270 basis points, while other subtypes experienced increases in the 200 to 240 basis points range. Assisted living and memory care suffered the highest vacancy rates in the second quarter, tallying 13.6 percent and 13.8 percent, respectively. In the meantime, the lowest vacancy rate—11.6 percent—was experienced by skilled nursing facilities.


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The pandemic had little impact on the construction of new affordable housing. Unlike other sectors considered nonessential, affordable housing construction continued during the quarter without significant effect from shutdowns or construction delays.

Affordable housing’s national vacancy rate improved in the second quarter, as the rate fell by 10 basis points to 2.4 percent. However, that number was higher than the 2.3 percent registered a year earlier. Moody’s Analytics expects the vacancy rate to remain flat and finish the year at 2.4 percent, reflecting previous projections.

Safe from Harm

Affordable Housing Vacancy and Rent Growth. Source Moody’s Analytics REIS

The sector experienced inventory growth of 0.5 percent—down from 0.09 percent in the same quarter of 2019—pushing rents by 0.1 nationwide in the second quarter. That put 2020 rent growth at 0.7 percent midyear. It’s expected to complete the year at 1.0 percent. About 5,700 units were completed in the quarter, down from 7,900 units the sector has averaged per quarter over the past year and the lowest number since the third quarter of 2016.

It is essential to note an affordable housing shortage has been a major issue (predating) the pandemic, thus the constant supply and demand imbalance for this sector reinforced the critical need for affordable housing across the country,” Moody’s Analytics Q2 2020: Affordable Housing Quarterly View noted. And, as a direct result, this sector has been mostly unaffected by COVID-19.