CCRC operators are being tested when it comes to how much they are able to raise rents versus what residents are willing to pay and at what quality level.
A Q2 2023 NIC report showed that “even high-end properties, with their premium amenities and enhanced living standards, are not immune to the sensitivities of their residents regarding rate increases.”
The resident will only pay so much, according to the report’s author Omar Zahraoui.
He studied occupancy and year-over-year (YoY) changes in inventory, and same-store asking rent growth—by care segment—within CCRCs and non-CCRCs in the 99 combined NIC MAP Primary and Secondary Markets. The report also explores the distribution of occupancy rates by payment type across all care segments during the second quarter of 2023.
Without considering any discounts being offered, the monthly average of asking rent for CCRCs remained higher across all segments. However, non-CCRCs had relatively larger rate increases from year-earlier levels across all segments except nursing care.
Assisted living and memory care saw the greatest YoY for non-CCRCs at 5.9% to $6,006 and 5.9% to $7,671, respectively.
For CCRCs, the largest annual growth in rent growth was found in the assisted living and memory care segments (5.0% to $6,555 and 5.3% to $8,292, respectively.
Occupancy for CCRCs continued to outpace non-CCRCs across all care segments.
Looking at CCRCs vs. non-CCRCs, the independent living segment moved highest at 6.5pps to 90% and the assisted living segment was next at 4.4pps to 86.9% and memory care to 86.4%. The smallest rise was in nursing care at 1.4pps.
From year-earlier levels, nursing care inventory for both CCRCs and non-CCRCs experienced the largest declines (negative 1.9% and 0.9%, respectively).
The highest year-over-year inventory growth was reported for the non-CCRC independent living segments (3.4%) and memory care segments (1.8%).