Senior housing occupancy levels have increased for the ninth consecutive quarter, according to a new report issued by the National Investment Center for Seniors Housing & Care. If current supply and demand trends persist, NIC predicts that the overall occupancy rate could reach pre-pandemic levels in 2024.
In a survey of 31 primary markets, NIC found that the senior occupancy rate was 84.4 percent in the third quarter of 2023, up 0.8 percent from the earlier post-COVID high of 83.6 percent in the second quarter. The overall occupancy rate hit a low of 77.8 percent in the second quarter of 2021, almost 10 points down from the 87.1 percent occupancy rate in the first quarter of 2020. The vacancies in the primary markets represent 109,358 unoccupied units. Meanwhile, another 32,722 units are under construction in these same metros.
Demand is outstripping supply in both assisted living and independent living properties, but assisted living properties are recovering more quickly. Assisted living occupancy rates within the 31 markets improved 0.9 percentage points in the third quarter, jumping to 82.6%, while the independent living occupancy rate improved by 0.7 percent, increasing to 86.1%.
“It’s been a very steady recovery,” Caroline Clapp, senior principal at NIC, told Multi-Housing News. “The gap between the highest occupancy rate and the lowest occupancy rate for those 31 primary rates has been narrowing.”
Macroeconomic considerations could be having an impact on seniors’ financial planning. Clapp noted that seniors who own their homes may be encouraged to take advantage of the current sellers’ market and move into multifamily senior housing.
Another factor impacting senior multifamily is the aging of the Baby Boomers, who are making up an increasingly large share of the senior population. “In the continuum of care, moving from traditional housing into the next levels of housing and care, independent living comes first,” said Clapp, noting that the oldest Baby Boomers are turning 77 this year, close to the average independent living resident age of 82.
Gen X, however, is a notably smaller generation than the Baby Boomers, something that could see the number of senior citizens as a percentage of the population diminish in the coming decade. While the higher proportion of immigrants among the younger generation may offset that dip, Clapp admits that “it does look like there’s a drop-off demographically.”
As seniors become a group of people mostly born in the 1950s and, eventually, the 1960s, rather than those born in the first half of the 20th century, their more modern tastes are expected to be reflected in the housing stock.
“Consumer preferences are different from prior generations,” said Clapp. Younger and soon-to-be seniors tend to prefer communities with more of a hospitality feel, as well as multi-generational communities. There is also likely to be more attention paid to “focus areas” – communities for veterans and the LGBT being two prominent examples.
