Seniors Housing Performing Better Than Pre-Pandemic

Seniors housing’s recovery is powering ahead of pre-pandemic performance numbers, according to a new report from Marcus & Millichap.

Since spring 2021, when the sector became rejuvenated post-COVID-19, more than 103,000 units were absorbed on net over the next 10 months.

“That is more than double the number of doors that were relinquished during the worst of the pandemic,” according to the November 2023 report.

Memory care centers are showing best, having seen their overall occupancy level rise above the pre-pandemic high. Deficits among the other senior housing community types and CCRC are narrowing.

Year-over-year rent growth is up between 6% and 6.7% based on type of care, roughly double the pre-pandemic pace.

For those looking to downsize their housing, seniors housing is more affordable than a single-family home, given the rapid elevation in mortgage rates over the past 19 months. The typical mortgage payment on a median-priced home is up to $3,115 as of September, roughly $700 shy of the mean rent in an independent living community.

Before the pandemic, that gap was more than twice as wide, according to Marcus & Millichap.

Those costs are also taking a toll on development. Spikes in lending costs have prevented some projects from penciling, even as the long-term demand outlook remains robust, according to the report.

Even with positive projections for the sector, investment activity in senior housing remains challenged and closing transactions more difficult.

The number of assets that have changed hands through the first nine months of this year is down about 25 percent from what was typical before the pandemic, Marcus & Millichap said.

Operationally, staffing is still a menace. The number of people working in senior housing is 1.9% less than year-end 2019 while the number of facilities nationally has expanded by 8 percent.