With more than 1,800 attendees at last week’s NIC Spring Conference, it was the ideal time to ‘take the temperature’ of the stakeholders serving and investing in the senior housing and care landscape.

Attendees were asked, “What is your 2024 outlook for senior housing and care?” to which they selected a response ranging from “Extremely Positive” to “Extremely Negative.” As detailed below, nearly 8 out of 10 attendees responded, “Somewhat Positive” or “Extremely Positive.” 

Not surprisingly, there were differences in outlook across various stakeholder groups with developers, lenders, and investor/equity providers expressing a less positive outlook. Given the current conditions related to access and cost of capital, this result was not unanticipated. The average ratings by attendee category are noted below, with the higher the average representing the more positive the outlook.

Despite the differences, in general, the sentiment on outlook is one that is fairly positive. This is an important finding, particularly given the current headwinds facing the sector. Clearly conference attendees remain bullish on the sector despite some of today’s challenges.

One of the additional goals of asking the outlook question was to develop a sentiment index that can be assessed over time as the industry progresses in the months and years ahead. NIC will again survey conference attendees at the NIC Fall Conference and the 2025 NIC Spring Conference to examine industry sentiment over time.

Older adults who live in senior housing communities live longer, receive more home health services, and benefit from greater rehabilitative and preventive care in the two years following move-in than those who do not, according to new research. The research was supported by a grant from NIC and led by an independent team of researchers at NORC at the University of Chicago. 

Researchers compared older adults who moved into senior housing communities in 2017 and resided there for two years or until their death to a similar group of older adults who remained living in the greater community. They analyzed six measures: mortality, days alive, days away from home due to adverse health events, days receiving home health care, preventative and rehabilitative health services days, and days on anti-psychotics to understand the impact of senior housing.  

On average, older adults who move into senior housing: 

• Live longer—Living more than one week longer than older adults who live in the community, and have a lower mortality rate; 
• Receive more home health care—Receiving 10 more days of home health care services than older adults who live in the community; 
• Obtain more preventative/rehab services at home—Receiving four more days of preventative and rehabilitative services at home than older adults who live in the community; 
• Spend less time on anti-psychotics—Spending three fewer days on anti-psychotics than older adults who live in the community. 

Researchers found that older adults who moved into senior housing properties spend roughly the same number of days away from home to receive high-acuity care as older adults who live in the surrounding community. 

The implications for this type of work are significant and will also inform future research projects. One of the findings was that while on average, senior housing properties have metrics more favorable than for those who live in the greater community, the variability among senior living properties is meaningful. There can be more done to learn about those properties who consistently rate among the highest quartiles and replicate those qualities to narrow the spread of rankings between the highest and lowest performing properties.  

The study is the third part of a four-part project supported by NIC to assess the health and well-being of senior housing and care residents. Previous studies provided insights on the vulnerability of senior housing residents and access to health care providers, and the final study will assess health outcomes of residents in senior living settings. Access the summary report on the longevity findings, which provides more details, here.  

Middle income seniors don’t have a wealth of senior living options. Either they don’t have enough money to afford a market rate community, or too much to qualify for an affordable place.  

To address this widening gap, a panel of experts explored innovative solutions at a recent NIC webinar. About 1,000 people attended the February 1 session, which highlighted the business opportunity for industry stakeholders.   

“The middle market has been underserved,” said Bob Kramer, co-founder and strategic advisor of NIC. “We need practical solutions for this huge and growing cohort.” 

The session was led by NIC Head of Research & Analytics, Lisa McCracken. She was joined by Ryan Brooks and Caroline Clapp, both senior principals at NIC. They reviewed recent research to provide context for the discussion.   

The shortage of senior housing for average Americans was first identified in NIC’s 2019 study, “The Forgotten Middle.” It was updated in 2022. 

The number of middle-income seniors by 2033 will grow to 15.9 million, accounting for 44% of all seniors. About half will have chronic health conditions or mobility limitations. But only 2.2 million will be able to afford assisted living.  

Due to a number of factors, middle market seniors face the dual burden of housing and care. “The private and public sectors have a lot of work to do,” said Clapp. The opportunity for the industry is to create a less expensive senior living model. “As the price point goes down, the potential market goes up,” said Brooks.    

Defining the Middle Market 

Middle income seniors are not all the same, cautioned Kramer. “There is no one-size-fits-all solution.”  

The middle market can be divided into three income segments ranging from 60-150% of area median income (AMI). Kramer challenged providers to ask themselves:  

* What part of the market are you seeking to serve?  

* What level of services will you provide?   

* What are the payment sources?  

* What are the barriers to scale? 

Financing a sustainable model is a big hurdle. A recent Milken report suggests four strategies: 1) Repurpose distressed properties; 2) Create a revolving loan fund; 3) Establish a value-based care delivery and payment model; and 4) Launch a senior housing-payer pilot partnership.  

Two panelists presented their successful approaches.  

Presbyterian Homes & Services targets the higher end of the middle market. “We maintain tight efficiencies and staffing ratios to bring down rents,” said Jon Fletcher, senior vice president at the organization. The goal is to tie increases in rents and expenses to the Consumer Price Index (CPI), so apartments remain affordable.  

Innovation Senior Living repurposes distressed properties, growing in number post COVID. Buildings purchased at reduced prices can keep rents affordable, according to Pilar Carvajal, founder & CEO at Innovation. She also partners with healthcare and community service providers. 

Panelist Lundat Kassa, vice president at Bellwether Enterprise Real Estate Capital, said that financing in today’s capital constrained market takes creativity. Lending sources are available, but public-private partnerships are needed to scale successful models.  

McCracken wrapped up the session with a lighting round question. What key lever would produce more middle market senior housing? 

Suggestions were to repurpose more underperforming properties and expand the definition of affordable housing used by policy makers to include the middle market.  

More public subsidies and social impact investors are also needed. “We have the opportunity to solve this crisis,” said Carvajal.  

The following analysis examines occupancy and year-over-year changes in inventory, and same-store asking rent growth—by care segment—within entrance fee CCRCs and rental CCRCs in the 99 combined NIC MAP Primary and Secondary Markets. The analysis also explores the recovery of regional occupancy rates by majority contract type (entrance fee CCRCs vs. rental CCRCs) and compares the distribution of occupancy among different community types and by contract type during the fourth quarter of 2023. 

Key takeaways

• The occupancy rate for entrance fee CCRCs surpassed 90% in the fourth quarter 2023. 
• Entrance fee CCRCs maintained higher occupancy rates than rental CCRCs across all regions and care segments. 
• Occupancy rates and recovery timelines continue to be uneven across regions. In future publications, NIC Analytics will explore these regional differences to understand the underlying drivers. 
• The memory care segment within rental CCRCs experienced the smallest asking rate growth but the largest annual occupancy gain. 
• Nursing care Inventory within CCRCs is shrinking at a higher pace. There is a trend of CCRCs converting skilled nursing beds to assisted living or memory care units. 

The Occupancy Rate for Entrance Fee CCRCs Surpassed 90% in the Fourth Quarter 2023. In the 99 NIC MAP Primary and Secondary markets, the occupancy rate for entrance fee CCRCs increased to 90.2%, 4.1 percentage points (pps) higher than rental CCRCs (86.1%) and 6.6pps higher than non-CCRCs (83.6%). 

NIC Analytics recently published its first occupancy stratification report, which examines the distribution of stabilized occupancy within the senior housing sector in 2023. The report shows that CCRCs had the smallest share of communities with occupancy below 80% compared to other community types. Additionally, only about 10% of entrance fee CCRCs reported occupancy below 80%, less than half the share found in rental CCRCs and the smallest share across NIC MAP Vision dimensions comparisons. 

Across all Regions, Entrance Fee CCRCs Maintained Higher Occupancy Rates than Rental CCRCs in the Fourth Quarter 2023. The largest differences in occupancy between entrance fee and rental were reported for the West North Central and Southeast Regions, where entrance fee CCRC occupancy was 4.8pps higher than rental, followed by the Mountain (4.7pps), and the Northeast (3.4pps). 

Strong Occupancy Rates in Mid-Atlantic and Northeast. The Mid-Atlantic and Northeast Regions had the strongest occupancy rates for both entrance fee and rental CCRCs in the fourth quarter 2023. The occupancy rates within these regions with respect to contract type were well above the average occupancy rate for entrance fee CCRCs (90.2%) and rental CCRCs (86.1%) in the combined 99 NIC MAP Primary and Secondary Markets. 

Mid-Atlantic and Southwest Regions Closest to Recovery. For entrance fee CCRCs, the Southwest and Mid-Atlantic Regions are the closest to fully recovering and returning to the occupancy levels of the first quarter 2020. The Southwest Region has reached 86.9% occupancy, while the Mid-Atlantic Regions is at 92.3%. Both regions are within 0.4pps and 1.0pps, respectively, of reaching pre-pandemic first quarter 2020 levels. As for rental CCRCs, the Southwest Region (84.3%) has fully recovered and returned to the occupancy level of the first quarter 2020. 

In future publications, NIC Analytics will explore these regional differences to understand the drivers behind higher occupancy rates or faster recovery in some regions, and relatively lower occupancy rates or slower recovery in others. 

4Q 2023 Market Fundamentals by Care Segment – Entrance Fee CCRCs vs. Rental CCRCs  

Occupancy. Overall, the occupancy rate for entrance fee CCRCs continued to outpace that of rental CCRCs across all care segments. The difference in the fourth quarter 2023 occupancy rates between entrance fee CCRCs and rental CCRCs was largest for the independent living segment (3.8pps) and the assisted living segment (3.4pps), and smallest for the nursing care segment (1.0pps). 

The entrance fee CCRC independent living care segment had the highest occupancy (91.9%) in the fourth quarter of 2023, followed by entrance fee CCRC assisted living and memory care segments (89.7% and 88.5%, respectively). 

In terms of occupancy improvements from one year ago, the largest occupancy gains for both entrance fee CCRCs and rental CCRCs were seen across assisted living and memory care segments, while the smallest gains were seen across independent living segments (1.0pps and 1.1pps, respectively).  

Asking Rent. The monthly average asking rent for entrance fee CCRCs across all care segments remained higher than rental CCRCs. The highest year-over-year asking rent growth for entrance fee CCRCs was noted in the assisted living and memory care segments (5.8% to $7,380 and 5.7% to $9,051, respectively). For rental CCRCs, the largest year-over-year asking rent growth was noted in the independent living segment (4.2% to $3,518), while the smallest growth was seen in the memory care segment (3.8% to 7,433). Interestingly, the memory care segment experienced the largest annual occupancy gain (3.7pps) across all care segments and payment types.  

Note, these figures are for asking rates and do not consider any discounting that may be occurring. 

Inventory. Compared to year-earlier levels, nursing care inventory for both entrance fee and rental CCRCs continued to experience the largest declines (negative 1.2% and 2.0%, respectively). On the other hand, positive year-over-year inventory growth was reported for the entrance fee CCRC assisted living segments (0.2%) and memory care segments (0.2%).  

Negative inventory growth can occur when units/beds are temporarily or permanently taken offline or converted to another care segment, outweighing added inventory. Anecdotally, there is a trend of CCRCs converting skilled nursing beds to assisted living or memory care units. 

Look for future blog posts from NIC to delve deep into the performance of CCRCs.   

Interested in learning more?   

To learn more about NIC MAP Vision data, and about accessing the data featured in this article, schedule a meeting with a product expert today.   

This article originally appeared in Ziegler’s Senior Living Finance Z-News.  

The following analysis examines initial rate growth and discounts offered compared to asking rates across all senior housing care segments. Additionally, the analysis explores initial rate growth patterns within select NIC MAP® metropolitan markets reported by NIC MAP Vision. 

Key Takeaways:  

• Initial rate growth remained robust and near record highs for assisted living and memory care but showed a slight deceleration for independent living. 
• Some markets saw negative year-over-year rate growth in initial rates in December 2023, contrasting with December 2022, when rates were positively growing, often in the double digits. 
• Average initial rate growth is expected to align with inflation in 2024, based on historical trends. 
• Discount strategies are being employed to offset higher initial rate growth and attract new residents.  
• The pace of move-ins appears to be a factor influencing these pricing strategies. 
• Independent living had the lowest average pace of move-ins in 2023, while memory care had the highest, followed by assisted living. 
• Discounts increased in independent living, held steady in assisted living, and declined in memory care. 
• In 2023, a NIC analysis revealed differences in rate increases and their effects on demand growth and occupancy recovery between independent living, often a lifestyle choice, and assisted living/memory care segments, which are primarily need driven. This trend is consistent across discount strategies. 

The Pace of Growth in Initial Rates Remained Robust and Near Record Highs for Assisted Living and Memory Care but Showed a Slight Deceleration for Independent Living 

For the independent living segment, average initial rate growth peaked during the annual period ending December 2021, with the largest annual growth (7.1%) among all senior housing care segments. However, this pace of growth decelerated in the following annual periods ending December 2022 (5.4%) and December 2023 (6.3%), with initial rate growth being the lowest compared with assisted living and memory care segments.  

This deceleration may be partly attributed to relatively slow move-ins for independent living and increased competition from active adult properties. Notably, the pace of move-ins for independent living averaged around 2.3% of inventory in 2023, less than that of assisted living (3.3%) and memory care (3.6%). 

The assisted living segment experienced relatively higher year-over-year increases in average initial rates compared to independent living in December 2022 and December 2023, with 8.0% and 8.5%, respectively. 

The memory care segment showed the largest year-over-year increase for initial rates among the three care segments, with an 8.3% increase in December 2022 and an 8.9% increase in December 2023.  

In December 2023, the average initial rate for an independent living unit was $3,702, translating to $44,424 annually. For an assisted living unit, the average initial rate was $6,017, equivalent to $72,204 annually. For a memory care unit, the average initial rate was $7,899, equivalent to $94,788 annually. 

Separately, inflation rates, as measured by the Consumer Price Index (CPI), were 7.0% in December 2021, 6.5% in December 2022, and 3.4% in December 2023. Despite a noted easing of inflation, initial rate growth for all segments continued to outpace inflation as of December 2023, indicating that senior housing operators maintain the upper hand in pricing.  

While these rate adjustments are being made to account for increased care and operating costs due to inflation, the pace of growth in rates is expected to align with inflation at some point in 2024. This projection is based on historical trends and the observed 6-to-9-month lag between rate growth and inflation that was observed in 2022. 

Discounts and Initial Rate Growth Vary by Care Segment and Market

Interestingly, some markets experienced negative year-over-year growth in initial rates in December 2023. For example, in the assisted living segment, Cincinnati, OH and Dallas, TX, saw declines of 7.1% and 1.8%, respectively. Similarly, Detroit and Houston experienced decreases of 15.6% and 7.3%, respectively, in the memory care segment. This contrasts with December 2022, when year-over-year growth in initial rates across these markets and care segments was positive, often in the double digits. 

Discounts Increased in Independent Living, Held Steady in Assisted Living, and Declined in Memory Care 

In 2023, a NIC analysis revealed differences in rate increases and their effects on demand growth and occupancy recovery between independent living, typically a lifestyle choice, and assisted living/memory care segments, which are primarily need-driven. This trend is consistent across discount strategies.

In the independent living segment (frequently more of a lifestyle choice than need-driven), discounts between asking rates and initial rates have been increasing since December 2019. averaging 10.3% or $424 off the asking rate in December 2023, equivalent to 1.2 months on an annualized basis. 

Initial rate discounts compared with asking rates in the assisted living segment were relatively lower and remained generally consistent with discounts offered since 2019, averaging 6.3% or $404 in December 2023, equivalent to 0.8 month on an annualized basis.  

In the memory care segment, discounts between asking rates and initial rates averaged 7.1% in December 2023, equivalent to $606. Despite the relatively higher rate increases for the memory care segment, annualized discounts have been decreasing in the last two years, from 1.2 month in December 2021 to 0.9 month in December 2023. 

These trends and patterns also suggest that the pace move-ins – lowest independent living and highest in memory care – had some impact on the discounts being offered. 

In conclusion, the analysis raises some important questions: Are these pricing strategies sustainable? What is the long-term effect of these discount strategies on resident retention and the pace of move-ins and move-outs? Will senior housing properties maintain the upper hand in pricing as inflation continues to moderate? 

Additional key takeaways are available to NIC MAP Vision subscribers in the full report.  

NIC MAP Vision continues to work to onboard new data contributors and is dedicated to reporting more metropolitan markets. It is only with the support of Actual Rates data contributors and officially certified Actual Rates software partners that expanded metro-level reporting is now available. For more information on which metropolitan markets are now available to NIC MAP Vision subscribers, please contact a product expert at NIC MAP Vision today.   

About the Report  

The NIC MAP Vision Seniors Housing Actual Rates Report provides aggregate national data from approximately 300,000 units within more than 2,700 properties across the U.S. operated by 35 to 40 senior housing providers. 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. Note that this monthly time series is comprised of end-of-month data for each respective month, and that the set of properties included in each month’s data set is subject to change. The sample is not “same store,” and occupancy is inclusive of newly opened properties in lease-up. NIC MAP Vision is working on including same-store rate metrics in a future release.  

Interested in Participating?  

The Actual Rates Data Initiative is an effort to expand senior housing data and we are looking for operators who have five or more properties to participate. NIC MAP Vision has expertise in extracting data from industry leading software systems, such as Aline, Alis, Eldermark, MatrixCare, Move-N, PointClickCare, Vitals, and Yardi and can facilitate the process for you.   

Operators contributing data to the actual rates report receive a complimentary report which allows them to compare their own data against national and metropolitan market benchmarks. In addition to receiving a complimentary report, your organization benefits through:  

• More informed benchmarking, strategic planning, and day-to-day business operations,  
• Increased transparency, aligning with other commercial real estate assets in terms of data availability, 

• Saved time, Actual Rates data is collected electronically directly from operators’ corporate offices, removing the need for telephone calls to individual properties, and  
• Enhanced investment and efficiency across the sector.  

Visit NIC MAP Vision’s website for more information.