Greater Demand for Senior Housing Pushes Occupancy Upward for Fourth Consecutive Quarter

Senior housing occupancy increased 0.9 percentage points from 80.5% in the first quarter of 2022 to 81.4% in the second quarter of 2022, according to data from NIC MAP Vision. This is the fourth consecutive quarter of occupancy growth, and occupancy is up 3.4 percentage points this quarter from a pandemic low of 78% in the second quarter of 2021.

Approximately 78% of the senior housing units vacated during the pandemic have been re-occupied within NIC MAP’s Primary Markets, which are 31 metro markets in the United States for which NIC MAP Vision has collected data since 2005.

“The sector has not fully recovered from occupancy losses during the height of the pandemic, but the continued upward occupancy trend despite workforce and supply challenges is a positive sign,” said Chuck Harry, NIC’s chief operating officer. “Today’s economic challenges could present another hurdle for operators, but we cautiously believe that the upward trend in occupancy will continue because the need for senior housing remains strong.”

Demand continues to outweigh supply, driving occupancy upward. Quarterly demand was at its highest level since NIC MAP Vision began reporting the data in 2005. On the supply side, inventory increased by a lesser amount—3,489 units—largely due to the pandemic-driven slowdown in construction starts in 2020. Starts were again weak in the second quarter of 2022, and units under construction measured the lowest since 2015.

“Rising materials prices, high inflation, construction industry labor shortages and the Federal Reserve’s policy change toward higher interest rates are collectively stalling new constructions,” said Beth Burnham Mace, NIC’s chief economist. “This will likely continue the trend of low to moderate levels of new inventory, which should help boost occupancy.”

Boston (86.3%), Minneapolis (85.1%) and Portland (85%) had the highest senior housing occupancy rates within NIC MAP’s Primary Markets in the second quarter of 2022. The markets with the lowest occupancy rates included Houston (76.1%), Atlanta (77.8%) and Cleveland (78.2%).

These demand and inventory factors helped 10 of the 31 NIC MAP Primary Markets recover more than half of their pandemic-related occupancy loss.

Occupancy improved for all housing types. Assisted living, which is largely need-based, had the largest quarterly gain. More specifically, data from NIC MAP Vision reported:

  • Assisted living occupancy increased 1.1 percentage points from the first quarter to 78.8%, up from its pandemic low of 74.1% in the second quarter of 2021 but still below its pre-pandemic level of 84.7%.
  • Independent living occupancy increased 0.7 percentage points to 83.9% and was up 2.2 percentage points from its pandemic low of 81.7% in the first quarter of 2021, but still below its pre-pandemic level of 89.6%.
  • Nursing care occupancy increased 0.9 percentage points to 78.5%, up from its pandemic low of 74% in the first quarter of 2021 but still below its pre-pandemic level of 86.6%.

Annual rental rates rose across NIC MAP’s Primary Markets by 4.6% for assisted living in the second quarter. This was the largest increase since NIC MAP Vision began reporting in 2005. Annual growth in rental rates for independent living was 3%.