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Senior living asking rates were driven to record highs in June compared with the previous year, as the Federal Reserve raised interest rates in response to “red-hot inflation,” according to Omar Zahraoui, senior data analyst at the National Investment Centers for Senior Housing & Care.

Asking rates rose across independent living, assisted living and memory care communities, he wrote in the September NIC Insider newsletter, “despite the market’s still relatively low occupancy levels in general.” Independent living had the largest year-over-year increase at 9.4% in June, followed by memory care at 8.9% in April and assisted living at 8.7% in April.

One reason that the independent living sector might have experienced the biggest bump were the discounts and incentives offered by operators last year to entice new residents, NIC Research Statistician Anne Standish noted in a Tuesday blog post. In general, she said, independent living communities offered more discounted rates during recovery than did assisted living and memory care communities.

Average initial rates for residents moving in were below asking rates for all three care/service segments in the second quarter of 2022, Standish said. Again, independent living showed the most initial rate discounting of 10.5% ($388) in June. This discount was equivalent to 1.3 months on an annualized basis, according to the statistician. 

“Initial rate discounting for IL segments has not been this strong since April 2020, when it was at 10.6% ($355),” Standish wrote.

Memory care had an initial rate discounting of 8.9% ($691) in May, which Standish said is equivalent to 1.1 months on an annualized basis. 

Assisted living overall showed an initial rate discounting of 7.5% ($434) in June, up from a discount of 6.6% ($352) in June 2021. 

“The June 2022 discount was equivalent to 0.9 month on an annualized basis,” Standish wrote.

Move-ins for independent living were 2.4% in June, a level that was 1 percentage point below the pace of move-ins for assisted living and 1.4 percentage points below that of memory care, according to data from the NIC MAP Vision Seniors Housing Actual Rates Report. 

“While senior housing operators have effectively increased rates, it is vital to understand what current and potential senior housing residents are willing to pay and the potential impact of any additional rate increases on the pace of move-ins and move-outs,” Zahraoui wrote. “Monitoring this relationship can help inform the potential for future rate increases, especially as inflation stabilizes and eventually subsides.”