Data from the recently released 4Q 2024 NIC MAP Actual Rates Report show that:
As 2024 ended, the senior housing market witnessed a notable shift in pricing dynamics between independent living (IL) and assisted living (AL) properties. Historically, initial rate growth in both property types moved nearly in tandem (see exhibit below), with operators adjusting pricing strategies in response to similar macroeconomic and demand trends. However, since mid-2024, a clear divergence emerged, with IL properties accelerating initial rate growth and reducing discounting, while AL properties experienced a slowdown in initial rate growth alongside increased discounting.
This shift marked a departure from previous years, when IL operators relied more heavily on discounting to drive lease-ups. Instead, December 2024 data reflected a market where pricing power returned to operators.
While move-ins continued to exceed move-outs in the fourth quarter of 2024 for both IL and AL properties, this break in historical alignment between IL and AL initial rate trends signals a change, and affordability likely played a role in shaping these new market dynamics, particularly in the need-based AL property type, where margin compression poses risks.
Going into 2025 and as care costs continue to rise, price sensitivity in AL is increasing, leading operators to recognize that IL and AL require distinct pricing strategies. IL properties can capitalize on rate elasticity due to their choice-based nature, while AL operators need to navigate the affordability equation strategically to maintain occupancy growth momentum while preserving financial health.
Independent Living Properties: Strong Pricing Momentum and Reduced Discounting
Year-over-year growth in initial rates for independent living properties continued to set new time-series highs in the fourth quarter of 2024, building on the record growth seen in the previous quarter. Initial rates surged 12.9% year-over-year in December 2024, more than doubling the 5.4% increase seen in December 2023. Operators also reduced discounts, with initial rates averaging 5.5% ($238) below asking rates in December 2024, compared to 8.9% ($359) in December 2023. This equated to a 0.7-month discount on an annualized basis, down from 1.1 months the previous year.
Assisted Living Properties: Slower Rate Growth and Widening Discounts
In December 2024, initial rates grew just 1.7% year-over-year, down sharply from 6.9% in December 2023. Unlike IL, discounting in AL widened, with initial rates averaging 8.6% ($567) below asking rates, compared to 6.4% ($402) in December 2023. This resulted in a 1.0-month discount in December 2024, up from 0.8 months the previous year.
Additional key takeaways are available to NIC MAP subscribers in the full report.
About the Report
The NIC MAP 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 a requirement for participation is restricted to operators who manage 5 or more properties. Visit the NIC MAP website for more information.