Senior housing market brightens for investors as occupancy rates rise

    There may be light at the end of a nearly four-year tunnel for investors in the senior housing market, The Wall Street Journal reports.

    Investors bet billions that the aging of the baby boom generation would send rents and occupancies soaring.

    The pandemic wrecked that hope temporarily as vacancies rose and deaths mounted in senior communities. 

    But the tables are turning as occupancy rates at private-pay senior housing communities are closing in on pre-pandemic rates.

    In the fourth quarter of 2023, the average rate was at 85.1% in the 31 largest markets nationwide, according to the National Investment Center for Seniors Housing & Care.

    The number is two percentage points lower than in the first quarter of 2020 but up from the pandemic low point of 77.1% in the first half of 2021. The rent increases have outpaced inflation, with independent living costing an average initial rate of $4,126 in December and assisted-living units costing $6,422.

    Investors in the market still face challenges. Many facilities face staffing shortages, and high interest rates have hurt the value of senior housing communities, just as they have done with office buildings and other commercial real estate. 

    Many seniors also choose to defer move-in decisions to the facilities because improvements in health care and technology have made aging in place easier. 

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