Senior Housing Occupancy Ticks Up in Q2 2024
This means more seniors than ever are moving into senior housing.
Senior Housing occupancy improved for the 12th consecutive quarter to 85.9% in Q2 2024. Ten of the last 12 quarters have seen the highest volumes of absorption in the history of NIC MAP Vision data collection. This means more seniors than ever are moving into senior housing.
The second quarter marks the 12th consecutive quarter that absorption has exceeded inventory growth which has led to continued occupancy growth across the sector. Absorption increased by 36% compared to Q2 2023. Absorption is expected to remain strong, as demand from the 80+ population is expected to expand over the next two decades. In the near term, occupancy will continue to increase as demand is expected to continue to outpace new supply.
The pace of new inventory growth was up slightly in the second quarter compared to the first quarter. However, not a single quarter over the last two years has exceeded over 3,000 operational units added in NIC MAP Vision Primary markets. Furthermore, the number of senior housing units currently under construction in Q2 is down 21% compared to last year. Given the overall trend in new construction, the expectation is for units under construction to continue to decline in the coming quarters. Construction represented 3.8% of existing inventory in the second quarter, down from 4.8% a year prior. Historic inventory growth, both short and long term, are required to keep pace with current and anticipated demand.
While senior housing occupancy is increasing, the reported annual rent change, measured against the previous year, has begun to decelerate from its all-time peak high during 2023. The average asking rent for senior housing in Q2 exceeded $5,300, the highest average rent in history. This is a 4.4% increase compared to the previous year. After nine straight quarters of rate acceleration, we have now seen four consecutive quarters of deceleration from a 6.1% peak in Q2-2023 to 4.4% this quarter. While year-over-year rent growth has decreased, it still represents a pace well-above historic norms.
Senior housing is poised to be one of the most profitable real estate asset classes, according to NIC MAP Vision data in its Senior Housing Market Outlook.
Commentary provided by Arick Morton, NIC MAP Vision CEO
—Posted on July 30, 2024.
