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Senior living occupancy recovery continues to show encouraging trends, but rate increases could drive some prospective residents away from a community, according to an analysis of second-quarter occupancy and inventory changes in both continuing care retirement / life plan communities and non-CCRCs shared by speciality investment bank Ziegler.

The findings, from the National Investment Center for Seniors Housing & Care and based on NIC MAP data, indicate that although providers successfully pushed post-pandemic rate hikes earlier this year to boost occupancy levels, the tactic might be testing the limits of some prospective residents despite their ability to pay those higher rates.

The analysis revealed that even high-end properties with premium amenities are not immune to resident sensitivity to rate increases.

“Even residents who can theoretically afford these rate hikes may become resistant after a certain limit,” Omar Zahraoui, NIC principal in research and analytics, wrote in a blog. “It is also important to understand what both current and prospective senior housing residents are prepared to pay, and the potential impact of rate increases on the pact of move-ins and move-outs.”

Asking rents remain elevated

Monthly average asking rents for CCRCs remained higher across all segments, but other types of senior living and care communities had larger rate increases from 2022 levels across all segments, with the exception of nursing homes. 

The highest year-over-year rent growth for non-CCRCs was seen in assisted living and memory care (both 5.9%), followed by independent living (5.8%) and skilled nursing (2.9%). Similarly, asking rents for CCRCs saw the largest annual growth in assisted living (5%) and memory care (5.3%), followed by independent living and skilled nursing (both 4.3%).

CCRCs lead occupancy

Overall, CCRC occupancy continued to outpace that of non-CCRCs across all care segments. 

The CCRC independent living segment had the highest occupancy, at 90%, in the second quarter, followed by assisted living (86.9%) and memory care (86.4%). Year-over-year occupancy gains — for both CCRCs and other types of communities —- were seen across assisted living and memory care, whereas the smallest gains were seen across independent living.

The largest difference in second-quarter occupancy was seen in independent living — a 6.5-percentage-point difference between CCRCs and other community types — and assisted living, where the difference was 4.4 percentage points. The smallest difference (1.4 percentage points) was seen in the nursing care segment.

The data also revealed that 89% of entrance fee independent living segments reported an occupancy rate of more than 80% in the second quarter — the largest share across all care segments and payment types — followed by 82% of assisted living, 78% of memory care and 68% of nursing care. 

Approximately 74% of rental CCRC independent living segments reported occupancy of more than 80% in the second quarter, followed by assisted living and memory care (both 75%) and nursing care, at 66%.